Chicago soybean futures experienced a decline to a three-year low on Wednesday. This drop was attributed to a surplus in supply and the strengthening of the U.S. dollar, rendering U.S. agricultural products less appealing to importers.
The most active soybean contract on the Chicago Board of Trade (CBOT) was down 0.8% at $11.76-3/4 a bushel by 0619 GMT, hitting the lowest point since December 2020. The surge of the U.S. dollar to a three-month high against major currencies on Tuesday, fueled by higher than expected U.S. inflation in January, played a significant role in this downturn.
Andrew Whitelaw, from agricultural consultants Episode 3, noted, "The dollar index has risen dramatically, causing U.S.-origin grains and oilseeds to look expensive." Analysts anticipate a slowdown in the U.S. soybean crush for January due to disruptions caused by frigid weather impacting processing plants.
Commodity funds, holding substantial net short positions in U.S. grain futures, were reported as net buyers of Chicago corn but net sellers of soybeans and wheat on Tuesday.
Furthermore, the combination of decreasing crop prices and escalating production costs is expected to considerably reduce U.S. net farm income this year. In Europe, France's farm ministry revised down estimates of winter grain sowing, with the soft wheat area anticipated to be the second lowest in 30 years due to disruptive heavy rain during field work.
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