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Could Speculation about Brazil Weather Support Soybean Exports?

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Soybean prices rise

Soybean January futures contracts trading on the Chicago Board of Trade (or CBOT) advanced by 0.94% to settle at $8.89 per bushel on December 1, 2015. Soybean futures prices rose due to high crushing data from the US Department of Agriculture. The Teucrium Soybean Fund (SOYB) followed CBOT and grew by 1.2% on December 1, 2015.

The US Department of Agriculture’s oil seed crushing, production, consumption, and stock report was released on December 1, 2015, for October 2015. Soybeans crushed totaled 5.1 million tons in October compared to 4.0 million tons in September 2015 and 4.3 million tons in August 2015. Crude oil produced from crushing totaled 2.0 billion pounds, 28% more than in September 2015 and 21% more than in August 2015. The refined oil production was 1.6 billion pounds, up 13% from September 2015 and 12% from August 2015. Higher crushing data supported the demand sentiment in soybeans. As a result, soybean futures prices rose on December 1, 2015.

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Brazil’s trade ministry reported 1.4 million tons of soybean exports during November 2015 compared to last year’s 176,556 tons. In October 2015, the soybean exports were 2.6 million tons. The lower-than-anticipated export sales were due to late planting at the beginning of the season due to dry weather conditions in the key soybean growing regions such as Mato Grosso.

The majority of Brazilian soybean exports come from Mato Grosso. With good progress in the soybean planting of 80% compared to an average of 88%, analysts are still hopeful that Brazilian soybean production will rise above 100 million tons.

Fertilizer businesses affected

Fertilizer companies such as CVR Partners (UAN) will benefit from increasing soybean prices, as producers would be able to spend more on fertilizers given their increase in income. CVR Partners (UAN) rose on December 1, 2015, by 0.58%. However, CF Industries (CF), Martin Midstream Partners (MMLP), and Chemical & Mining Co. of Chile (SQM) dropped by 2.5%, 3.4%, and 4.2% on December 1, 2015. The Material Select Sector SPDR ETF (XLB) rose by 0.70% on December 1, 2015.

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