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Analysis Grains

Does weak Biden lead to a revival in soybeans?

July 4, 2024 - Jurphaas Lugtenburg

Fresh news to get the grain market moving is missing. Contradictory reports are coming from the Black Sea region. After earlier reductions this week, SovEcon actually raised the wheat harvest forecast for Russia. In the US, there is speculation about the impact of the weak impression Biden made during an election debate on the soy market. China is a major buyer of American soybeans, and as known, Trump is extremely critical of China.  

The September wheat contract on the Matif closed €3.75 lower at €223.75 per ton yesterday. Wheat on the CBoT closed 1.2% lower at $5.54½ per bushel. Corn showed a modest increase of 0.4% to $5.54½ per bushel. Soybeans had a stronger lift, closing 1% higher at $11.76½ per bushel.

The news about the wheat situation in the Black Sea region is contradictory. The JRC and Argus tempered the harvest expectations for the region earlier this week. SovEcon, on the other hand, revised the forecast for the Russian harvest upwards. The agency now expects a wheat harvest in Russia of 84.1 million tons, compared to the previous prediction of 80.7 million tons.

Holiday Mood
What also doesn't help is that America has a day off today for Independence Day. Overall, it seems that traders were already in holiday mode yesterday. Some analysts expect wheat on the CBoT to slowly build momentum for an upward price movement. With over 50% harvested, the supply of wheat that needs to be immediately offloaded must dry up according to this group of analysts.

The weather is not favoring the grain market either. The changeable and wet weather in Northwestern Europe is not really affecting the market. In the US, there was a threat of dryness in the major corn-growing regions in Iowa and Illinois. However, rain has fallen over the area in recent days, easing concerns about drought.

Tactics
The USDA yesterday published an order for 110,000 tons of soybeans with an unknown destination. Traders are speculating about China's role in the global soybean market. The presidential elections could have an impact on this. Biden did not perform the strongest, to put it mildly, in a debate with Trump. As known, Trump is critical of the trade relationship with China. There is speculation that China, anticipating a possible Trump victory, is already adjusting where and how much soybean is being purchased. Purchases in South America are being postponed or delayed according to some analysts. Soybeans from the US are being brought forward by China to ensure certainty in case Trump is re-elected as President of the US.

Jurphaas Lugtenburg

Jurphaas Lugtenburg is a market specialist in onions, carrots, and commodities such as wheat, corn, and soybeans at DCA Market Intelligence. He combines his degree in business administration with a passion for farming.
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