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Soybean Prices Drop Amid Tariffs and Export Sales Outlook

Soybean prices continue to decline, down 14 to 11 cents. The upcoming EU tariffs on U.S. soybeans and expectations from the USDA's export sales report could further impact market dynamics.

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AI Rating:   5

Market Overview: The report highlights significant weakness in the soybean market, indicated by a drop in prices across various categories. The national front month Cash Bean price decreased to $9.33, while Soymeal and Soy Oil futures also saw declines. This bearish trend in the market can lead to lower revenues for companies involved in soybean production.

Impact of Tariffs: The impending EU retaliatory tariffs may further disrupt U.S. soybean exports, particularly since the EU is projected to include soybeans in their tariffs. Given that the U.S. has already shipped 4.5 million metric tons (MMT) of soybeans to the EU this marketing year, the tariffs could diminish future sales and create additional downward pressure on prices.

Export Sales Report Expectations: The USDA’s upcoming weekly Export Sales report, estimated to show soybean sales in a range of 275,000 to 700,000 MT for 2024/25, will be crucial. The lower range for new crop sales, estimated at 0-100,000 MT, is concerning and indicates a potential slowdown in demand which could negatively affect revenues and profit margins.

Planting Intentions: Recent Stats Canada data indicates a 1.37% year-over-year decline in soybean acreage, possibly signaling lower future production levels, which may indirectly affect supply and pricing dynamics depending on future weather conditions and demand.

International Competition: The report also mentions Brazil’s increasing soybean exports expectation, which could add competitive pressure on U.S. soybeans if global prices continue to favor Brazilian production.

This analysis shows that investors need to be cautious as the combination of tariffs, export sales expectations, and international competition could lead to a negative outlook for soybean-related stocks in the S&P 500.

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