According to analysis by StoneX, soybeans ended last week higher on the Chicago Stock Exchange. This occurred because, after a truce in trade tensions, the market reacted positively. More specifically, the nearest contract price closed at US$1042.75 per bushel, representing an advance of 6.7%.
In addition, the recovery was boosted by former President Donald Trump's announcement midweek that he would delay imposing additional tariffs on countries that did not take retaliatory measures against the US. As a result, market sentiment improved. Consequently, risk assets such as soybeans were favored.
However, China, the world's largest buyer of the oilseed, opted for a retaliatory stance, which intensified the trade war between the two countries. The tariff escalation has virtually made bilateral trade between the world's two largest economies unfeasible, adding uncertainty to the global commodity market. Even in this turbulent scenario, the postponement of new tariffs by the US was enough to provide some support to prices.
At the same time, the United States Department of Agriculture (USDA) released a new update to its Supply and Demand report, with modest changes. The highlight was the increase in the projection for soybean crushing in the US, in response to the strengthening of domestic demand. This movement may gain even more momentum. This will occur if talks between biofuel producers and the government progress on the possible increase in the biodiesel and renewable diesel blending mandates.
Therefore, the market remains attentive to both trade developments and US energy policy, which could strongly influence the behavior of prices in the coming weeks.
Source: Leonardo Gottems | agrolink
