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IKAR in Mass Media

PM markets: soybean futures see 'corrective rally'

28 июля 2016 года

Soybean markets continued to bounce back, helped by a hotter August outlook.

Next month will be key to soybean yields, and with above average temperatures now indicated across the US Midwest, there is some weather risk to put back on after a precipitous sell-off in last two weeks.

"I would say that fundamentally the market bounce is a reaction to heat to the six to ten day forecast," Jim Sullivan, at Leese Trading Group, told Agrimoney

"This really is really just fine tuning weather risk premiums," he said.

Kim Rugel, at Benson Quinn Commodities, noted "the potential for hot temperatures" in early August.

Chinese buying

There was some support from the demand side as well China came back into the picture.

The USDA reported export sales to China of 131,000 tonnes of soybeans, of which 65,000 tonnes were delivery this year, the USDA said.

Richard Feltes, at RJ O'Brien said that markets "will be watching Friday's China soybean reserve auction carefully" in order see if sales slow, indicating government unwillingness to discount prices.

"Slower soybean reserve sales would boost interest in foreign soybean purchases although analysts note that Chinese soy imports typically slow appreciably in late summer," Mr Feltes said.

Mr Feltes suggested that the "sudden return of China as an active soy buyer in concert with sub-optimal US August weather would be highly supportive to the soybean market".

November soybean futures finished up 1.3% on the day, at $9.86 a bushel.

No trouble sourcing old crop

But Darrell Holaday noted that the heavy exports, that have been booked for the rest of the marketing year, should be pushing up soybean basis, and August-November spreads.

"Neither of these has occurred," Mr Holday said.

"Normally commercials would be scrambling to obtain product to fill these ships this time of year."

"Obviously, they are not having trouble sourcing the inventory of old crop production," Mr Holaday said.

Correction of oversold markets

But although prices were up for the second day running, this may not be enough to generate upward technical momentum.

"While the bean price action in the last two days looks impressive, the reality is we broke so far and so fast , that for the this rally to mean anything technically further price action will need to be accomplished," Mr Sullivan said.

"At the very least November beans need to close the week over $10 a bushel, or this rally is just correction of oversold conditions," he said.

Ethanol turns lower

Limiting upside for soybeans, energy prices continue to slide. September Brent crude oil futures were down 2.9%, to $43.59 a barrel, their lowest level since May 10.

Ethanol futures jumped, briefly, as the US energy agency announced ethanol production was down 31,000 barrels day, from last week's record levels, to 998,000 barrels a day.

And stocks of the corn based biofuel fell even faster, down 767,000 barrels a day, reflecting falling demand.

But ethanol prices were weighed down by the slide in oil prices, down 1.2%, to $1.437 a gallon.

The USDA announced fresh export sales of 247,912 tonnes, of which 74,064 tonnes if for deliver in 2015-16.

December corn futures finished up 1.0%, at $3.43 a bushel.

Pressure from heavy stocks

But wheat futures edged down, under pressure from heavy world stocks.

Ikar lifted its forecast for the Russian wheat harvest by 1.0m tonnes, to 69.0m tonnes, 4.0m tonnes ahead of the USDA's official forecast.

But the consultancy warned that rains were hitting wheat quality.

Chicago wheat futures finished down 0.2% on the day, at $4.41 Ѕ a bushel.

Sugar tumbles on technical weakness

Raw sugar futures slid to a fresh five week low, in a market that is starved of bullish news, with the size of fund long positions still hanging over the picture.

The Brazilian cane belt has been drying out, allowing harvesting to pick up pace there.

"The fundamentals will be given an update when Unica's report for the Centre South Brazilian crush during the first half of July on Monday," said Nick Penney, at Sucden Financial.

"This is expected to show some very high numbers," he warned.

And Mr Penney also noted technical pressure, after front-month sugar settled below 20 cents a pound in the previous two session.

"The inability to close above 20 cents has not been constructive and we continue to believe that the 19 cent level is still vulnerable," Mr Penney said.

October raw futures fell as low as 18.99 cents, settling down 2.6%, at 19.1 cents a pound.

http://www.agrimoney.com/

Source: Agrimoney.com  |  #sugar #grain   |  Comments: 0   Views: 114

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