17.06.2021 (www.theedgemarkets.com) - (June 17): Soybeans wiped out this year’s gain as rains across the US growing belt and questions over government biofuel policy erode bullish sentiment. Other crop futures from soybean oil to corn also slid.

Prices for soy had surged as much as 27% through mid-May, topping their highest since 2012 in Chicago. The gains were part of a sweeping rally across agricultural markets, driven by soaring Chinese imports, rising demand for crop-based fuels and bad weather in global grain-growing regions.

A stretch of wetter weather headed for the US Midwest has since helped to soothe crop concerns, although good conditions through August are needed to ensure a bumper harvest in one of the world’s top suppliers.

Supply prospects for other oilseeds are also improving as rains reach Canadian canola fields and Indonesia is set to churn out a record palm oil crop.

The recent slide across agricultural commodity markets could eventually trickle to store shelves, helping cool global food inflation worries.

“Beans continue to follow the weather market and also feel pressure from concerns about potential lower biofuel targets,” CHS Hedging said in a note.

Soybeans fell as much as 2.8% to US$13.055 a bushel in Chicago, putting them slightly lower on the year. The most-active contract recently rolled to follow later-dated November futures — which tracks supplies after the next US harvest — contributing to the decline.

Soybean oil is also plummeting, with prices down 15% this week. Corn slid 4.1% on Thursday to the lowest since March, hogs are near a one-month low and sugar and coffee have retreated.

The Biden administration is developing targets for biofuel that are likely to be relatively flat or even lower, and the Environmental Protection Agency is set to propose the renewable fuel requirements within weeks, according to several people familiar with the strategy.

The targets will dictate how much corn-based ethanol, biodiesel and other renewable fuels oil refiners must blend into their products in 2021 and 2022.

Still, large crop traders expect markets to stay elevated for a few more years, driven partly by continued grains buying from China. At the end of the month, a US Department of Agriculture report on soybean and corn plantings will be closely watched to see if high prices lured farmers to expand acreage.

Hog futures in Chicago plunged by the exchange limit on Wednesday on concerns that China may slow overseas purchases.

Herds in the Asian nation, the world’s biggest pork consumer, are rebounding, and pig prices have dropped low enough that foreign supplies are becoming less appealing.

https://www.theedgemarkets.com/article/soybeans-wipe-out-years-surge-crop-rally-cools