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US Soybean Edges Higher Amid Ongoing Chinese Demand

7 Feb 2019 8:31 am
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Mumbai (Commoditiescontrol) - U.S. soybean futures edged higher on Wednesday as the government confirmed more soy purchases by China, but the market remained largely static as traders waited for a raft of U.S. crop data due on Friday, some of it delayed by the government shutdown. Mar 19 Soybeans closed at $9.21 3/4, up 1 1/2 cents,May 19 Soybeans closed at $9.35 3/4, up 1 1/2 cents. Meanwhile, Mar 19 Soybean Meal closed at $309.00, down $0.50, Mar 19 Soybean Oil closed at $30.90, up $0.52.

Chinese purchases of US soybeans have reached 3.8 million mt since Vice-Minister Liu said his country would buy 5 million mt to smooth over trade negotiations, the USDA said in its latest release on Tuesday. Under its 24-hour reporting system, the agency said that 586,000 mt of soybeans were sold to China and a further 182,000 mt to unknown destinations. It is the third successive day that the USDA has said China has bought soybeans, taking the total to 3.8 million mt to China and a further 456,000 mt to unknown destinations. The trade estimates that between 4 and 5 million mt have been bought. However, the exact figure won’t be known until February 22, when the USDA will publish export sales data by destination for most of January and the first two weeks of February.

Moreover, Chinese purchase for ‘5 million tons’ from United States looks more to be a sign of ‘good feel gestures’ rather than actual demand. Moving ahead, as Brazil harvest is in its full pace demand from China is likely to shift from US to Brazil which will add on more weakness to global sentiments. As per market sources, Chinese buyers took 91% of Brazil’s beans in January – a high figure in historical context, but 5 percentage points below December’s level. January exports were 2.15 million mt - a record for the month.

At other nation’s front, Brazilian state research group Deral reports that the soybean harvest in Paraná is now 25% complete, with most of the crop in average or good condition. The country’s second-largest soybean producing state is expected to harvest about 617 million bushels this season.

This Friday is the much-anticipated data dump day where the USDA will reveal its February estimate of world agricultural supply and demand alongside stock positions for January, with the market expecting a cut in soybean production north and south of the Panama Canal. With January’s estimate skipped due to a government shutdown, the market expects the final figure for US soybean production to emerge as well as a clearer picture of what damage the Argentinian and Brazilian crop has suffered. Another key figure will be Chinese imports, which were estimated in November and December at 90 million mt.

In the meantime, Mr. Dorab Mistry has once again given positive outlook for Malaysian palm market in GlobeOil conference held in Delhi. Mr. Mistry stated palm prices in Malaysia, the world’s second-biggest producer, may climb to 2,400 ringgit a ton by the end of March if the Malaysian currency remains at current levels. Also, Indonesian Palm association pegged Dec’18 stocks at 3.26 million tons, much down from market anticipation of 3.65 million tons and Nov stocks of 3.89 million tons. Exports in 2018 climb to more than 34m tons last year vs 32.1m tons on y-o-y basis.

Moving ahead, after the resumption of Asian market, CBOT soybean is likely to take support with renewed buying interest from China in short term. Also likely increase in Malaysian palm prices shall also provide strength to overall veg oil basket.

(By Commoditiescontrol Bureau)

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