The Soya complex hit new contract lows yet again this week, as the market continues to correct itself in line with the global Supply and demand (S&D). Can the Chicago Board of Trade (CBOT) get back down to the lows we saw back in March 2016 when the board was around $265ish? The carryout was nowhere near what we have today at 895 million bushels. Yes the trade war is certainly keeping a lid on the funds’ position as they are unclear what a deal could do to the overall S&D. It will still be very fresh in their minds when they got their fingers burnt after they were all long due to the small Argentinian crop, then the U.S. / China trade war happened and prices collapsed. Having said that you feel with all the problems China has with their demand being drastically cut due to African Swine Fever (ASF), it’s hard to see what China could do at the moment to change the bearish market sentiment. The funds will be wary in case China has to sweeten any deal by buying a huge volume of soybeans or even corn and tuck it away in the reserve stocks, therefore tightening up the S&D.
Overall the market is around £3 / tonne cheaper for the UK buyer week on week.
The Below graphs shows the May ’19 contract movements for CBOT Soybean meal futures.