Soybean and corn prices fall amid tightening quarantine restrictions in China

Yesterday, oil, soybean and corn prices accelerated the decline amid reports of China imposing new tough restrictive measures to curb the spread of the coronavirus.

May futures for Brent oil on London’s ICE Futures fell 6.5% or $ 8 / barrel to $ 112.5 / barrel yesterday (currently trading at $ 111 / barrel) and WTI oil on New York commodity exchanges (NYMEX) – by 7.7% to $ 106 / barrel ($ 104.9 / barrel), while last week they rose by 12% and 10.5%, respectively.

The reasons for lower oil prices are as follows:

• Shanghai authorities are closing the part of the city where the financial district and industrial parks are located for 4 days from Monday for mass testing of citizens, which will reduce the demand for energy in the country.
• Yemeni Hussite leader Mahdi al-Mashat has announced an end to attacks on facilities in Saudi Arabia. Last week, Saudi oil facilities were attacked by missiles and drones, increasing the risk of cuts in oil supplies from the country.
• EU countries have not yet decided not to give up purchasing Russian oil. However, the European Commission’s plans to abandon Russia’s energy resources by 2027 have been approved by EU leaders, said EC spokesman Tim McPhee.
• The Caspian Pipeline Consortium has resumed partial shipments of crude oil after several days of shutdowns last week due to storms.

Following oil prices, May soybean oil futures fell 3.2% to $ 1,630 / ton yesterday, followed by soybean futures down 2.7% to $ 624 / t.

Updated soybean harvest forecasts in Brazil are pushing for quotes. Compared with the previous estimate, Abiove lowered its forecast for soybean production in Brazil by 7.7% to 125.3 million tons, which is significantly higher than the forecasts of other analysts, which are in the range of 120-122 million tons.

Demand for American soybeans remains low. During the week of March 18-24, soybean exports from the United States grew by only 9.6% to 628.8 thousand tons, and in total in the season reached 43.43 million tons, which is 25% lower than last year.

May corn futures fell 0.7% to $ 293 / ton yesterday, but were supported by good export statistics. During the week, corn exports from the United States grew by 7% to 1.606 million tons, and in total in the season reached 29.03 million tons, which is significantly lower than 34 million tons shipped on this date last year.

Accelerated corn sowing in the United States and precipitation in the corn belt will increase pressure on quotations in the near future.