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Evening markets: China orders reassure corn, soybean bulls

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Grain bulls did get the US export sales announcements it was looking for.

 

The talk that Agrimoney highlighted earlier of Chinese purchases of US corn and soybeans was firmed up by the US Department of Agriculture, which said that 420,000 tonnes of the oilseed and 264,000 tonnes of the oilseed had indeed been ordered on this route.

 

That supported buying in both contracts, with Chicago corn for December closing up 1.3% at $3.96 ½ a bushel, a fresh one-year closing high for a spot contract.

 

It was little harm either that Chinese Dalian corn futures for January ended up 0.7% at 2,575 yuan a tonne, a fresh all-time closing high for a nearest-but-one contract, continuing the record run of prices since the country returned from its Golden Week holiday.

 

Furthermore, the dollar eased by 0.5% against the renminbi, improving Chinese purchasing power of dollar-denominated assets of many grains. (The greenback eased by 0.2% against a basket of currencies.)

 

Strong soy

Soybean futures for November added 1.2% to $10.56 ¼ a bushel, helped by the US export sale, but also by strength in the products.

 

Soyoil for December added 0.8% to 33.88 cents a pound, while December soymeal soared 2.1% to $363.60 a short ton, on gains helped by news of an open-ended strike at Argentine crushers, led by the Argentina Federation of Oilseeds Workers.

 

(Argentina is the top exporter of both products.)

 

This when there are ideas of plenty of demand around.

 

“There’s a good bit of beans and meal demand to be had from destinations that were simply pushed out of the way when China decided to buy out capacity through the end of the calendar year,” said Benson Quinn Commodities.

 

On soyoil, Oil World forecast that Brazil, better known as a soy exporter, will import 80,000 tonnes of the vegetable oil this month, up from 15,000 tonnes last month and 11,000 tonnes in October 2019, after an enthusiastic bean export programme left crushers short of raw material.

 

“We wonder what November, December, January imports will look like for Brazil,” said Terry Reilly at Futures International, with supplies of soybeans from the country’s harvest not coming on stream in earnest until early 2021.

 

Bull spreading

Bulls got reassurance too from contract spreads – with the December soymeal lot rebuilding its premium over the January 2021 contract, with December soyoil regaining a (small) premium over the January lot too.

 

Soybeans themselves attracted so-called bull spreading too, with the November contract outperforming the January one, which ended up 1.0%.

 

That said, the January contract retained the premium, just, in ending at $10.57 ¼ a bushel.

 

Russia debate

 

Chicago soft red winter wheat futures edged a more modest 0.5% higher to $5.96 ¾ a bushel, finding support from the weakening dollar, which boosts US export competitiveness, but resistance at the idea of getting over the key $6.00-a-bushel mark.

 

Ideas were mixed over the outlook for Russian dryness, a key market focus.

 

The forecast for “two-thirds of Russia is looking drier”, said Richard Feltes at RJ O’Brien, while Benson Quinn Commodities flagged “ideas of better precipitation for southern Russia”.

 

Hard wheat outperforms

 

Whatever, further dryness is expected in the southern Plains, where wheat sowings are also struggling with a lack of moisture, and “dry weather through the weekend will allow moisture shortages and stress to build further on wheat establishment,” Maxar said.

 

The conditions were reflected in an unusually poor initial winter wheat crop condition rating for Kansas, the top growing state.

 

Kansas City hard red winter wheat, as grown in the southern Plains, outperformed in gaining 0.8% to $5.35 ¼ a bushel.

 

In Paris, meanwhile, soft milling wheat added 0.4% to E203.50 a tonne, a five-month high for a spot contract, helped by French optimism on its wheat exports, and ideas of stocks closing 2020-21 at their tightest in seven years.

 

Robusta vs arabica

Among soft commodities, London robusta futures for January ended up 2.1% at $1,276 a tonne, lifted in part by profit-taking on short bets, after the contract in the last session ended at the lowest in nearly three months for a second-in contract.

 

The recovery helped reverse a few losses of late versus New York arabica coffee, which began its price recovery nearly two weeks ago, but actually eased by 0.5% to 109.60 cents a pound this time, amid some talk of spreading against robustas too.

 

Indeed, consumption ideas are working in robusta’s favour too, with the variety more exposed to the home-drunk blends which may be in particular demand again, amid fresh Covid-19 restrictions, which have tended to mitigate against the coffee bars whose blends are weighted towards arabicas.

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