MarketsFarm — China’s demand for U.S. soybeans has been the major factor behind the bullish soy complex at the Chicago Board of Trade (CBOT), according to Terry Reilly of Futures International in Chicago.
China has been on something of a buying tear, with sales being announced by the U.S. Department of Agriculture (USDA) on a regular basis every morning. On Wednesday, USDA announced a sale of 324,000 tonnes of China, which helped to push November soybeans above $10 per bushel (all figures US$).
“We got above the psychological $10 mark, which probably brought some of the funds back into the market,” Reilly commented, adding he expects soybeans to shift back and forth around that level.
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Also, he said there’s the belief in the market that USDA could lower the soybean carryout in its October world agricultural supply and demand estimates (WASDE).
“It’s not the USDA taking exports up, but for yields to come down a little,” Reilly said.
In the September WASDE, the department dropped its soybean yield forecast from 53.3 bushels per acre to 51.9, and ending stocks were slashed 24.5 per cent to about 12.5 million tonnes.
Additional support was coming from weakness in the U.S. dollar, as that makes U.S. exports more appealing, Reilly said. In recent weeks the U.S. dollar index has struggled to remain above 93 points.
More support was coming from crude oil prices, he added. West Texas intermediate was up by more than $1.50 per barrel on Wednesday, putting it a little under $40.
— Glen Hallick reports for MarketsFarm from Winnipeg.
