Soybean Futures Continue to Face Headwinds, China Fears in Particular

Soybean futures moved lower again on Thursday with many factors pressuring the market. One is fear over what happens when President-Elect Trump takes office and what he does with China. Arlan Suderman, Chief Commodities Economist with StoneX, says their folks on the ground in China tell him one of three things will happen here in about 60 days. Option 1 sounds promising.

“One is that we actually get a trade agreement whereby China would buy more corn and soybeans from us than what they have been in exchange for maybe Trump giving on some of the tariffs against consumer goods coming into the United States from China or something like that.”

The next two options aren’t as promising. Option 2 would be things continue as they have been.

“Where they continue to buy more and more soybeans and corn from Brazil and Argentina and less and less from the United States. Option three would be if things deteriorate rapidly to where they cut off the United States at a much quicker path, probably tied to that might be some type of conflict over Taiwan that might stimulate that as well.”

The China fear would be enough, but Suderman says you also have a lack of certainty around biofuels programs.

“The lack of a 45Z program and California’s proposition that limits soy oil to 20% of the feedstock, all those things, it’s just hard to build a case. So, the funds say, well, we’ll just short soybeans against everything else. And that’s the trend we’re seeing right now.”

January beans finished below $10 Thursday at $9.87 ½.