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Evening markets: Soy buoyancy proves fleeting, as proof of China demand awaited

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Show me the money.

 

It might have been expected that news that China has offered 10m tonnes of tariff-free quota for imports of US soybeans might send the oilseed markedly higher.

 

Besides the direct impact on US soybean demand, there is the broader issue that this could ease the path for a long-awaited trade deal between the two countries, which could herald extra Chinese demand for a stack of US ags.

 

“Talk circulating that Beijing green lights US pork purchases as well,” reported Richard Feltes at RJ O’Brien, noting that “senior level US-China trade talks resume on Friday”.

 

How much to they need?

However, Chicago soybean futures for November, having at one point managed 1.3% gains on the news to within an ace of their 16-month high, and in heavy trading, fell back to $9.36 ¼ a bushel in late trading, up only 0.3% on the day.

 

Terry Reilly at Futures International said that while “China opened the door to additional US soybean purchases”, the question “that remains is how much US soybeans will they need.

 

After all, “we are still hearing China remains a frequent buyer of South American soybeans.

 

“Up to 25 cargos might have been purchased from SA over the last week and half.”

 

‘Drier weather expected’

Indeed, whatever the rumour mill and wires may suggest, actual physical evidence of recent Chinese purchases of US soybeans remains sparse.

 

In particular, there was disappointment that, yet again, the USDA failed to have need to issue an alert of a large purchase of US soybeans.

 

Meanwhile, the Midwest weather outlook was a negative, in suggesting improved weather ahead for harvesting (although there do appear to be different interpretations of the outlook).

 

Maxar said that “drier weather is expected across the Corn Belt over the next five days, which should allow wetness to ease up some and harvesting to make better progress.

 

“The drier weather should continue in the northern Plains through next week,” although “rain will return to the southern Midwest”.

 

‘May be a window’

For the sake of balance, Agrimoney also reports comments from Karl Setzer, and chiming with those from some other commentators, that “forecasts are calling for additional rainfall for the next week.

 

“This will delay harvest in several regions of the Corn Belt, some of which have struggled to get any harvest accomplished at all.”

 

Of course, it depends on which model run you look at, what time period etc.

 

Benson Quinn Commodities said that “every forecast I see looks cold and wet, but there may be a window between now and the weekend for producers east of us to make progress”.

 

Whatever, corn futures for December managed gains, but only by 0.2% to $3.88 a bushel.

 

Traders have comments too over the better-than-expected US corn condition in overnight US Department of Agriculture data - although these statistics showed too an even slower-than-expected harvest.

 

‘Rising Black Sea values’

Wheat futures for December, meanwhile, eased by 0.2% to $5.22 ¼ a bushel in Chicago, again encountering profit-taking.

 

Sure, as Benson Quinn Commodities said, prices were finding some support from “concerns about southern Hemisphere wheat production also help”.

 

The broker added that “rising Black Sea values are probably the key to US wheat futures gaining value”, with SovEcon indeed having on Monday revealed Russian export prices at a five-month high, of $205 a tonne.

 

Meanwhile, Ukraine’s state weather forecasting centre raised ideas of dry weather curtailing winter grain sowings for the 2020 harvest.

 

Tenders shelved

All this of course amid a plethora of interest from importers, with Saudi Arabia and Egypt having newly purchased, and the likes of Algeria in the market.

 

Still, this importer talk faded as Ethiopia postponed a 400,000-tonne tender, while Jordan passed on a tender (OK, an outcome which is not that usual in itself).

 

While Paris wheat futures – closely watched across the Atlantic, given how close France, with it large exportable surplus, is to the world wheat trade programme - did manage headway, it was by a marginal 0.1% to close at E181.00 a tonne for December delivery.

 

In the US, Minneapolis spring wheat futures fared best, adding 0.2% to $5.38 ¾ a bushel for December, after USDA data showed continued problems in US harvest progress, and with ideas of further Chicago-Minneapolis spreading too.

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