Could Weaker South American Supply Boost Soybean Exports?


Nov. 16 2015, Published 2:28 p.m. ET

Soybean prices rise

November soybean futures contracts trading on Chicago Board of Trade (or CBOT) rose slightly by 0.09% and closed at $8.69 per bushel on November 12, 2015. Soybean futures prices increased due to speculative technical buying at the lower rates for the second consecutive day after the WASDE report release. Following the rise on the CBOT, the Teucrium Soybean ETF (SOYB) increased by 0.81% on November 12, 2015.

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WASDE report

Soybean futures contracts continued to receive technical support from the lower prices after the World Agriculture Supply and Demand Estimation (or WASDE) report. The speculative long trades on the soybean pushed the soybean prices up a notch from the lows consecutively on the second trading day.

South America’s weather has continued to remain dry, particularly in central Brazil. This could further stress the soybean crop and the soil moisture conditions, affecting the supply sentiment further on November 12, 2015.

Weekly Export Sales data

Due to the Veterans Day holiday, the US Department of Agriculture’s Weekly Export Sales data was released on Friday, November 13, 2015. The bullish weekly export sales report pushed to a price slump after the more-than-anticipated supply that supported the World Agricultural Supply and Demand Estimation report on November 10, 2015.

However, the technical buying in the last couple of days tried to cover the fall in prices, while analysts project substantial interest from potential buyers around the current level of prices. Thus, further support can be projected at this level. Soybeans are competing for South American supplies from Brazil and Argentina. With the supply halt due to Argentina’s election results, as well as the fall due to the ample supply sentiment, projections are strong for US soybean exports.

Fertilizer companies affected

Shares of Martin Midstream Partners LP (MMLP), CVR Partners LP (UAN), and Enterprise Products Partners L.P. (EPD) declined by 2.25%, 1.29%, and 3.16%, respectively, on November 12, 2015. However, prices of Chemical & Mining Co. of Chile Inc. (SQM) increased slightly by 0.11% on November 12, 2015. The VanEck Vectors Agribusiness ETF (MOO) fell by 1.44% on November 12, 2015


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