New Delhi — The soybean and corn futures plunged on favorable South American weather, coupled with the resurgence of African swine fever cases in China, market sources told S&P Global Platts Jan. 25.
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March soybean futures fell over 60 cents within hours to close at $13.0970/bu Jan. 22 on Chicago Board of Trade and are currently trading at $13.0738/bu at 0620 GMT Jan. 25.
A similar price pattern was seen in the Asian corn market.
March corn futures fell under $5/bu during Asian trading hours on the electronic CME Group's Globex Jan. 25.
The downtrend in futures sustained and the March corn contract was seen shedding another 5 cents/bu at 0301 GMT from its settlement of $5.50/bu Jan. 22.
Rains since mid-December have benefited both soybean and corn crops in South America, leading to improved yield expectations and upward revisions in output projections for the new crop.
The average projection for Brazilian soybean in 2020-21 marketing year (February 2021 - January 2022) has been revised up 400,000 mt from December estimates to 132.2 million mt, analysts said.
A similar trend is brewing in Argentina, where the soy production expectations for 2020-21 have increased 500,000 mt from November forecast to 47 million mt.
For the coming days, rains in South America are not showing any signs of relenting either.
Rains will remain active across Mato Grosso, Mato Grosso do Sul, Parana, Santa Catarina and Rio Grande do Sul, which will continue to support corn and soy growth in these areas for the week ending Jan. 30, weather agency Maxar said Jan. 22. In Argentina, rains have been sufficient in central and northern areas, thus supporting corn and soy growth, it added.
ASF resurgence in China
There are reports of African swine fever, or ASF, resurgence in a major pig farm in China, stoking demand concerns for soybean meal-based animal feed in the coming days.
According to market sources, new strains of ASF virus have been found at a pig farm in southern China and a sizable number of swine herd has been culled as a precautionary step.
A similar outbreak happened in October 2020 in the Asian nation and the government took prompt quarantine measures to combat the epidemic, analysts said.
The world's largest pork producer and consumer lost over 50% of its swine population to ASF, which emerged in August 2018. Following large-scale quarantine measures, over 200 million pigs were culled, leading to massive shortage of pork in the country.
China's pig farming sector has witnessed a rapid consolidation since late 2019 as small-scale farms were amalgamated into big entities under a government directive, a Beijing-based consultancy said earlier.
If the current swine growth trend continues, backed by a steady process of pork industry consolidation and biosecurity measures, China's hog production capacity is likely to reach 100% of pre-ASF level in June 2021, according to the Ministry of Agriculture's report Nov. 30.
However, the current ASF outbreak may dent the hog herd recovery projections, analysts said.