U.S. soybean intraday analysis: Brazil’s weather concerns remain, China’s soybean demand becomes the focus Provider FX678

Chicago soybean futures fell on Tuesday, giving up some of the previous day’s gains as investors awaited U.S. inflation data and sought further signs on Brazilian weather and Chinese demand that fueled Monday’s gains.

Corn and wheat also retreated.

As of 20:06 Beijing time, the main soybean contract Sv1 of the Chicago Board of Trade (CBOT) fell 0.9% to US$13.7075 per bushel. It rose to US$13.86 on Monday, the highest level since August 31.

CBOT soymeal futures SMv1 also fell after hitting daily trading limits during Monday’s rally.

Financial markets broadly consolidated after U.S. inflation data late on Tuesday were seen as an indicator of interest rate policy in the world’s largest economy.

Agency lowers Brazilian soybean production forecast

Consulting firm AgRural on Monday lowered its forecast for Brazil’s 2023/24 soybean production by 1.1 million tons to 163.5 million tons, and said further reductions are likely this month.

This has heightened concerns about hot and dry weather in Brazil, the world’s largest soybean exporter, as farmers plant the next crop.

Brazil mainly produces two crops of corn a year. According to the 2022 corn production data of CONAB, a national commodity supply company affiliated with the Brazilian Ministry of Agriculture, Brazil’s first-season corn production accounts for 21.45% of the total output, and second-season corn accounts for 76.47%.

Brazil’s second-crop corn is mainly planted after the soybean harvest. According to the latest data in November 2023, 14 of Brazil’s top 20 soybean-producing areas in terms of output are expected to be the main planting areas for second-crop corn, accounting for about 70%.meanAbnormal weather in these production areas will not only affect the soybean harvest, but also the second-crop corn yield.

Scorching temperatures this week are likely to increase pressure on farmland in Brazil’s main central growing region, although increased rainfall next week may ease the pressure.

“The soybean harvest doesn’t look good,” said Vitor Pistoia, an analyst at Rabobank in Sydney.

A surge in U.S. soybean sales to China also supported the soybean market.

U.S. exporters sold 204,000 tons of soybeans for 2023/2024 delivery to China, the U.S. Department of Agriculture said on Monday.

“It’s all about weather and demand, which is likely to ensure the market remains volatile in the near future,” brokerage Copenhagen Merchant said in a grains report.

CBOT corn Cv1 fell 0.7% to $4.74 a bushel. Soybean prices rose on Monday, recovering from nearly three-year lows hit late last week, after the U.S. government raised its forecast for the U.S. harvest to a record high.

CBOT wheat Wv1 fell 0.9% to $5.74 a bushel.

Wheat markets shrugged off an unexpected drop in the USDA’s weekly estimate for U.S. wheat conditions, with crop ratings remaining at four-year highs.

Analysts say competitively priced Russian wheat and signs from Ukraine that shipping corridors are working are holding down wheat prices.