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CBoT Soybean Settles Higher On Short-Covering, Hopes For Chinese Demand; Shrugs Virus News

14 Feb 2020 8:08 am
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Mumbai (Commodities Control) – Chicago Board of Trade soybean futures closed higher on Thursday, rallying from early declines on short-covering and prospects for China to step up purchases of U.S. supplies as the U.S.-China Phase 1 trade deal goes into effect in days, analysts said.

CBOT March soybean futures settled up 3-3/4 cents at $8.96-1/4 per bushel, the contract's ninth consecutive higher close.

CBOT March soymeal ended up 20 cents at $291.90 per short ton while March soyoil fell 0.31 cent at 30.72 cents per pound.

Commodity funds hold a net short position in CBOT soybean futures, leaving the market vulnerable to short-covering rallies.

The U.S. Department of Agriculture reported export sales of U.S. soybeans in the week ended Feb. 6 at 651,100 tonnes (old and new crop years combined), at the low end of a range of trade expectations. That was a wk/wk reduction of 8.4% and was 39.5% lower than the same week last year.

Soybean shipments on the same week were 611,345 MT, which was 57.8% lower wk/wk. MYTD shipments still outpace last year by 22.6% at 27.448 MMT. The report also showed soybean meal bookings of 234,197 MT which was 10.1% higher wk/wk, but were 4.3% less than sales the same week last year. Soybean oil received 39,143 MT in export sales on the week ending 02/06. Soy oil exports for the same week were 12,809 MT which put MYTD exports at 342,869 MT.

Rallies capped by expectations of large South American soy harvests. Brazilian firm Agroconsult raised its forecast of Brazil's 2019-20 soybean crop to 126.3 million tonnes, from 124.3 million previously.

Argentina's Rosario grains exchange on Wednesday raised its forecast of the country's soybean crop to 55 million tonnes, from 54 million previously.

Meanwhile Brazilian soy exports to China may drop 7-15% this year due to the U.S.-China trade deal and a likely slowdown caused by the coronavirus outbreak, analysts projected on Thursday.

China is expected to import 54 million tonnes of soy from Brazil in 2020, down from 58 million tonnes the previous year, analyst Marcos Rubin at Brazilian research firm Agroconsult told an event in Brasilia.

"We see a small reduction in Brazilian exports to China, and obviously an increase in American exports to China," Rubin said. "But it's not a catastrophe."

Rabobank took a more pessimistic view, forecasting that China would buy 8 million tonnes less of Brazilian soy this year compared with 2019, a 15% drop.

Support and Resistance for the active contract lies at $8.83 and $9.06/Bushels, respectively.

(Commodities Control Bureau)



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