Favorable Demand Indications Supported Grain Prices
Soybean prices rose
Soybean futures contracts on CBOT (the Chicago Board of Trade) for March expiry rose by 0.41% and settled at $8.54 per bushel on March 2, 2016. Soybean futures prices advanced due to favorable export cues from China. Following the prices on CBOT, the Teucrium Soybean Fund (SOYB) rose by 0.35% on March 2, 2016.
Chinese grains giant COFCO anticipated that the soybean imports could reach 83 million metric tons for the marketing year 2015–16. According to the reports, soybean imports would be 6% higher from the previous year and 2.5% over the US Department of Agriculture’s February 2016 projections. The stronger export demand could support US soybean prices in the near term.
South American soybean harvesting is anticipated to take place in March 2016. However, reports suggest that dry conditions in Eastern Mato Grosso, the key soybean-producing region in the country, might have affected crop quality.
With the support of the lower Brazilian real, soybean exports from Brazil are anticipated to be more competitive. Private Analytics Informa Economics increased its soybean production estimates by 0.8 million tons to 101.5 million tons. However, the firm reduced the output prospects from Argentina by 1 million tons to 59 million tons on March 2, 2016. The analysts believe that stronger South American production will negatively affect the US soybean exports for the near term. Weaker export demand is expected to weigh on the futures prices, and it could keep soybean prices lower.
Fertilizer companies
The improvement in soybean prices supports fertilizer businesses, as it boosts sales. However, companies like CF Industries Holdings (CF), Chemical & Mining Co. of Chile (SQM), Agrium (AGU), and Syngenta (SYT) fell by 4.2%, 1.0%, 0.75%, and 0.23% on March 2, respectively. The Material Select Sector SPDR ETF (XLB) fell by 0.40% on March 2, 2016.
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