Afternoon Soybeans: Chinese inputs, harvest pressure weighed on the soy complex.

The soybean market broke sharply as part of a broader risk off trade across commodities and equities over the potential default of a major Chinese property developer, Evergrande.  There are fears that a default could lead a contagion of defaults in Chinese real estate and associated markets akin to the Lehman downfall during the US financial crisis.  The company had $89 billion in outstanding debt at the end of June, about 42% of which comes due in less than a year, according to its most recent financial results with a total debt burden that is the biggest for any publicly traded real-estate management or development company in the world.  Chinese markets are closed for their autumn festival until Wednesday, but global financial and commodity markets sold off as traders exit riskier investments to get to the sidelines.  

The selling today was weighted on the front end of the curve, weakening the bull spreads. Bean basis was little changed as most of the lofty premiums have already been erased over the past couple of months and the producer is focused on harvesting his crop instead of making new cash sales with prices under pressure.

China's absence at 8 am was a negative factor and general concerns over export demand even before Hurricane Ida have weighed on sentiment.

Weekly grain inspections data was a bit stronger than expected with corn at 403 tmt, wheat 563 tmt and beans 275 tmt. Importantly, activity out of the Gulf has resumed which is an encouraging sign and will continue to improve. Export loadings out of the Mississippi River totaled 350 tmt including 200 tmt of corn and 150 tmt of beans. China loaded out a cargo each of beans and wheat off the PNW, while they took 2 cargoes of corn out of the Gulf. The bean loadings were up from just 193 tmt last week and compare to 1.391 mmt the same week last year. Early in the new marketing year, bean exports total just 499 tmt compared to 3.707 mmt this time last year.

US soybean harvest progress debuted at 6% complete just a tick above the avg. trade guess of 5% and in line with the 5 year avg. on this date of 6%. The crop is 58% dropping leaves up from 38% last week and well ahead of the 5 year avg. of 48%. The crop ratings improved by 1% in G/E to 58% and held steady in P/VP at 14%, this time last year the crop was rated 63% G/E and 10% P/VP. The improvement in G/E comes on another wild swing in IL picking up 14% to 75% while P/VP went down by 7% to 4%.

In the product trade, soybean oil led the break following weakness in the crude oil/energy complex. Meal also traded lower but gained in the oil share spread.

Elsewhere in the news, Chinese customs data showed August imports of 9.49 mmt which was -1.2% from August 2020, year to date (March-Aug) soybean imports total 67.1 mmt which is up by 3.6% for the year. Imports of Brazil soybeans in August increased to 9.04 mmt from 8.15 mmt a year ago while imports from the US fell to 18 tmt from 166 tmt a year ago.

AgRural sees overall Brazil soybean planting progress at .1% as of 9/16 as planting gets underway of the states of Mato Grosso, Mato Grosso do Sul, Sao Paulo and Parana.


Soybean Basis:
Location Spot
US Gulf off 1 to +70
Brazil Paranagua off 10 to +230x
Cedar Rapids, IA up 10 to -20x
Mankato, MN steady -30x
Decatur, IL steady -10x
Claypool, IN steady opt price x
Columbus, OH steady -10x