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Higher-Than-Anticipated Soybean Exports Raise Prices

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Soybean prices rise

Soybean futures contracts on the Chicago Board of Trade (or CBOT) for January expiration rose by 0.14% and settled at $8.77 per bushel on January 7, 2016. Soybean futures prices rose due to an increase in soybean exports the previous week. Following the prices on CBOT, the Teucrium Soybean ETF (SOYB) rose 0.32% on January 7, 2016.

The USDA (U.S. Department of Agriculture) released its Weekly Export Sales data on January 7, 2016, for the week ended December 31, 2015. Soybean net export sales were 638,714 metric tons. It was higher than the previous week by 33% but lower than the prior four-week average by 46%.

Major destinations of the rise in soybean export sales were China, the Netherlands, Spain, Indonesia, and Egypt. The reductions were from Russia and Turkey. The increase in soybean exports supported the demand sentiment on January 7, 2016. It resulted in a rise in soybean prices that day.

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The weather in Brazilian soybean-producing regions is favorable. Supportive climate conditions in the north of the country have supported the moisture for the week ended January 7, 2016. Weather conditions are anticipated to remain favorable, which would support soybean output from Brazil. It could hinder US soybeans in the exports market and negatively influence futures prices.

The macroeconomic conditions for agricultural commodities such as soybeans are negatively influenced by China’s economic weakness in the near term. It will be interesting to see what influence important data releases have next week. The data will come from the annual survey of US crop production and the monthly World Agricultural Supply and Demand Estimate Report. Speculative trades before the data release could grab some attention and cause negative influence on futures prices amid rising supply and weaker demand sentiments.

Concerned fertilizer businesses

The increase in soybean prices negatively affects profitability. The fall in soybean prices negatively affects farm incomes. The fall in farm incomes adversely affects fertilizer sales and, in turn, the profitability of fertilizer businesses. CF Industries Holdings (CF), Chemical & Mining Co. of Chile (SQM), CVR Partners (UAN), and Martin Midstream Partners (MMLP) fell 4.7%, 4.7%, 3.0%, and 5.6%, respectively, on January 7, 2016. The Materials Select Sector SPDR ETF (XLB) fell 2.7% that same day.

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