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Soybean market being driven by "fear and greed" says commodity expert

China’s avian flu is having an effect on soybean prices

By , news-outlet gets comment from its Risk Management Commodity Strategist on China’s most recent strain of avian flu and how this new reality has exacerbated the volatility of the soybean market.

China’s creeping death toll reached nine as of Tuesday, April 9th due to the new strain of avian flu H7N9. With the total number of reported infections pegged at 28, the short-term economic impacts are already being felt in the soybean market.

“The recent bird flu scare in China has increased worries among traders that a fall in poultry demand in China could affect Chinese soybean meal demand,” says Moe Agostino - Risk Management Managing Commodity Strategist.

The soybean market took a hit, due to the dwindling demand for poultry meats and demand for feed. Reduced poultry consumption in China and government orders to cull flocks to prevent the avian flu from spreading is worrying traders. 

“Fear and greed drive markets to extreme levels and this was just another excuse for the managed money funds (speculators) to continue to sell near-term and drive soybean meal and soybean futures lower to test support at $13.50,” said Agostino.

Soybean imports may fall for the first time in nine-years, as reports of avian flu coupled with weaker pork prices will likely reduce demand for soymeal – an ingredient used in livestock feed. China is the world’s largest soybean importer, accounting for about 60% of imports.

“The news has abated 2013 May soybean futures after falling to flu depressed lows of $13.544/bushel on 04/05/13, prices have since rebounded to trade back to resistance near U.S. $14/bushel.  This was just more noise and an overreaction about the unknown and uncertainty in an ever more volatile commodity marketplace,” explains Agostino.

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