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Evening markets: Soybeans look like breaking with Thanksgiving tradition

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There is a risk that 2019 will be a 30% year.

 

That is “since 1975 beans have closed higher the day before Thanksgiving 70% of the time”.

 

However, on late deals this Thanksgiving eve, Chicago soybean futures for March stood down 0.2% at $8.97 a bushel.

 

The oilseed was little helped by a Brazilian real which renewed its decline against the dollar, standing 0.6% lower against the greenback.

 

With Brazil the top exporter of soybeans, and with it competitiveness enhanced by the real’s decline, this currency shift is a negative for dollar prices of the oilseed – and for the likes of coffee and sugar too, in which the South American country is also a major force.

 

‘Ongoing deficit phase’

 

New York arabica coffee futures for March, which were badly hurt in the last session by the real’s decline, actually stood up 1.2% at 118.30 cents a pound in this one.

 

Of late, setbacks in prices have been seen as buying opportunities.

 

But raw sugar for March did lose early headway to stand down 0.1% at 12.77 cents a pound.

 

Commerzbank, noting International Sugar Organization forecasts for a global sugar output deficit extending into 2020-21, said that “the ongoing deficit phase should lend buoyancy to the sugar price”.

 

However, “high Indian reserves that could result in exports to the global market are likely to slow the price surge, as the weak Brazilian real probably will too”.

 

’Significantly improve prospects’

 

Nor were soybeans aided by the Brazilian weather outlook, with rains expected, which Maxar said “should lead to major improvements in soil moisture across northern and central growing areas in Brazil”, with Goias, Mato Grosso do Sul, Sao Paulo, and Minas Gerais states top beneficiaries.

 

“The rain in these areas over the next week should wipe out most of the soil moisture deficits and should significantly improve prospects for corn and soybean growth.”

 

And grains didn’t help either, in heading south.

 

Sure, “corn has closed higher on the day before [Thanksgiving] 64% of the time and Chicago wheat closed higher 59% of the time”, according to Benson Quinn Commodities.

 

But March corn stood down 0.7% at $3.75 ½ a bushel, and March wheat down 0.6% at $5.27 ¾ a bushel.

 

‘Could be a surprise’

Wheat’s decline came despite expectations that there would be few, if any, deliveries against the December contract, which hits first notice day on Friday (and with US markets closed on Thursday for Thanksgiving).

 

“The market does not expect any deliveries in the Chicago wheat due to firm cash market and lack of registered receipts,” Benson Quinn Commodities said.

 

(Large deliveries, by contrast, are seen as a sign that the futures market is a relatively attractive place to sell.)

 

For corn too, the “market is looking for light deliveries, 0-400 contracts,

 

“But with cash trading below delivery there could be a surprise to the high side.”

 

‘Margins improved’

Corn’s decline also defied some decent US ethanol production data for last week, at 1.059m barrels per day - up 26,000 barrels per day from the previous week.

 

“Ethanol margins improved in recent weeks,” said Terry Reilly at Futures International, noting that this was the best production figure in four months.

 

Ethanol stocks fell too, by 237,000 barrels to 20.277m barrels.

 

Still, the declining real will stoke worries over demand for US corn on another front, exports, after their poor start to 2019-20.

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