Soybean futures hit limit amid unrest and speculation

A day to remember. That is how we can describe yesterday's session. Statements from the White House regarding China and the Strait of Hormuz combined with quite a bit of speculative trading in the futures market triggered the daily limit in soybeans for the first time since March 9, 2020 (during the corona pandemic). Farmers have very different concerns. In North America, there is a threat of a fertilizer shortage due to geopolitical tensions. The May contract for wheat on the Matif closed yesterday €3.25 lower at €207.25 per tonne. On the Chicago exchange, the decline was even steeper with a drop of 2.7% or 16½ cents to $5.97¼ per bushel. Corn made a similar move on the CBoT and dropped 13¼ cents to $4.54 per bushel. Soybeans took the biggest dive in the last trading session, closing down 70 cents. That is a drop of 5.7%, closing at $11.55¼ per bushel. We can say a lot about American President Trump, but it is rarely boring. After strong criticism of NATO, Trump reversed course yesterday and made an urgent plea to the alliance to assist the US in reopening the Strait of Hormuz. Various European leaders are not exactly eager to help America. The US has acted on its own in Iran, and they should clean up the mess themselve, is a sentiment widely heard. However, doing absolutely nothing is also not in Europe’s interest. We also feel the consequences of the limited availability of oil and oil derivatives here. Meanwhile, Trump is also trying to put pressure on China. The American president threatens that later this month he will not travel to China if China does not help lift the blockade of the Strait of Hormuz. Those statements had a clear impact on the US soybean market. The US and China are in discussions about a trade deal, and the export of soybeans to China is one of Trump’s priorities. The market started to anticipate the failure of a soybean deal yesterday. China tightens the reinsIn Brazil, the soybean harvest is continuing as usual. According to Patria AgroNegocios, 57.4% of the soybean area in the country has been harvested. Last year this week, the tally was at 66%, and the five-year average stands at 57.9%. In the largest soybean state, Mato Grosso, 96.4% of the soybean area has been harvested. The Brazilian Ministry of Agriculture has changed the rules for inspecting soybeans to China, AgRural reports. According to the new rules, soybean samples for inspection are collected by independent inspectors hired by exporters, rather than by inspectors from the ministry, AgRural reports. Due to new Chinese customs regulations, there are problems with the export of soybeans to China. Chinese customs have noted an increase in problems with Brazilian soybeans, including the presence of live insects, beans that have been treated with seed treatment agents such as pesticides and/or fungicides, and heat damage, a source told Reuters. Therefore, China is tightening the reins regarding the quality of soybeans from Brazil. On the futures markets, grains took a step back, but on the physical market in Russia, wheat rose to its highest level since August last year. SovEcon reports a price of $238 to $240 FOB (delivered on board) for Russian wheat. Export for the month of March is estimated by the market agency at 3.7 to 4.4 million tonnes. Farmers in the US and Canada, who are already worried about another year of low profits or even losses, are now also seeing the new season jeopardized by a looming fertilizer shortage. Prices have increased by more than a third since the conflict in Iran, according to local sources. The US, which imports half of its urea fertilizer in some years, is currently facing a shortage of about 25% on the usual stocks that farmers need for the spring, according to The Fertilizer Institute.