Soybean futures ended the week on a sour note as prices of the commodity cruised to its two-month low after reports on an improving prospect for Brazil’s may spell doom to US exports.
The most active soybean contract on the Chicago Board of Trade gave up 0.6% to settle at its lowest level in two months at $10.05-1/4 a bushel, which contributed to a weekly loss of a huge 3.1%.
The US Department of Agriculture released its monthly reported last week and has lifted its forecast for Brazil’s 2016-2017n soybean harvest from 104 million in February to a fresh record high of 108 million tons.
This has pushed the soybean markets to face strong headwinds.
Rabobank said on a market note that a record-high output expectation of 108 million tons caught the market off guard, which in turn resulted to a short term bearish response.
This project record-large Brazilian soy crop has put more pressure to US exports prospect as it made the competition tougher for the American rivals.
The agency slashed its estimates of soybean exports for the US in its 2016-2017 soybean harvest, with the competition against Brazilian cited as the main reason. But the government raised the soy year-ending stocks forecast above the analyst forecast to 435 million bushels.
Agribusiness economist Phin Ziebell commented, “Soybean crop yields out of South America are looking very good. All those weather concerns that we had earlier are gone."