When will China stop buying?
Will China stop buying?
The first question has been consuming traders for weeks as the giant soybean importing nation continues to blow through expectations of how much of the American crop it will take before stopping.
The second question isn’t yet being taken seriously by most traders but is beginning to niggle at the underlying assumption of finite Chinese demand for U.S. soybeans that the market rests upon.
“Traders are still assuming they’re buying this massive amount up front, but that doesn’t mean their total buying (of U.S. soybeans) will actually be any different,” said broker Ken Ball of P.I. Financial.
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“There’s a point at which that assumption might start to fall apart, but not yet.”
Weekly U.S. soybean exports once again far surpassed analyst expectations, U.S. Department of Agriculture revealed Thursday. That caused some traders to rush into soybean futures. Traders had expected 500,000 to 800,000 tonnes of export sales but were instead told by the USDA that the total was 1.4 million tonnes.
Soybean futures rose Thursday, but not by nearly as much as soybean oil futures.
Ball said the powerful surge of soybean oil futures — the strongest crop futures class of the day — could be the sign of another popular trade being unwound. Soybean oil export sales also increased, and traders with long soybean meal/short soybean oil spread positions might be bailing on meal and buying oil.
Soybean oil futures prices rose more than three percent on the day. Canola usually follows soybean oil prices closely, more closely than it tracks soybeans, but Thursday it couldn’t keep up to the oil price increase. Canola rose only 1.87 percent, or just over half the soy oil increase.
Canola did, however, rise more than corn and soybeans, which rose around 1.4 percent, and did much better than wheat, which rose slightly, and oats, which fell slightly.
Equity markets had a good day, with the big averages once again flirting with the round number totals that seem so hard to maintain. The Dow Jones Industrial Average traded both sides of 16,000 during the day, marking up a nice recovery from its short term fall from the lofty heights.
Good news about falling new jobless numbers and relief that U.S. Senate filibustering might be minimized helped cheer traders’ spirits.
ICE Futures Canada, dollars per tonne
Canola Jan 2014 490.00 +9.00 +1.87%
Canola Mar 2014 499.40 +9.00 +1.84%
Canola May 2014 507.00 +9.10 +1.83%
Canola Jul 2014 512.70 +9.10 +1.81%
Canola Nov 2014 514.80 +8.20 +1.62%
Milling Wheat Dec 2013 214.00 -2.00 -0.93%
Milling Wheat May 2014 234.00 -1.00 -0.43%
Durum Wheat Dec 2013 247.00 unch 0.00%
Durum Wheat Mar 2014 253.00 unch 0.00%
Durum Wheat May 2014 257.00 unch 0.00%
Barley Dec 2013 152.00 unch 0.00%
Barley Mar 2014 154.00 unch 0.00%
Barley May 2014 155.00 unch 0.00%
American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound
Chicago
Soybeans Jan 2014 1291.5 +17.75 +1.39%
Soybeans Mar 2014 1279.75 +15.5 +1.23%
Soybeans May 2014 1266 +12 +0.96%
Soybeans Jul 2014 1260.75 +10.5 +0.84%
Soybeans Aug 2014 1243 +10.5 +0.85%
Soybeans Sep 2014 1195.25 +8.25 +0.70%
Soybean Meal Dec 2013 411 +4 +0.98%
Soybean Meal Jan 2014 405.5 +2.6 +0.65%
Soybean Meal Mar 2014 398.3 +1.5 +0.38%
Soybean Oil Dec 2013 41.54 +1.22 +3.03%
Soybean Oil Jan 2014 41.8 +1.24 +3.06%
Soybean Oil Mar 2014 42.16 +1.21 +2.95%
Corn Dec 2013 423 +6 +1.44%
Corn Mar 2014 429.5 +4.25 +1.00%
Corn May 2014 437.5 +4 +0.92%
Corn Jul 2014 444.5 +4.25 +0.97%
Corn Sep 2014 450 +3.75 +0.84%
Oats Dec 2013 359.25 -1 -0.28%
Oats Mar 2014 319.5 -5.75 -1.77%
Oats May 2014 311 -2.5 -0.80%
Oats Jul 2014 307 -1.5 -0.49%
Oats Sep 2014 307.25 -1.5 -0.49%
Wheat Dec 2013 648.75 +1.5 +0.23%
Wheat May 2014 658.5 -0.75 -0.11%
Wheat Jul 2014 656 +1.25 +0.19%
Wheat Sep 2014 663.75 +1.5 +0.23%
Minneapolis
Spring Wheat Dec 2013 697.75 unch 0.00%
Spring Wheat Mar 2014 707.25 unch 0.00%
Spring Wheat May 2014 714.25 -0.25 -0.03%
Spring Wheat Jul 2014 721 -0.5 -0.07%
Spring Wheat Sep 2014 723.5 -0.75 -0.10%
Kansas City
KCBT Red Wheat Dec 2013 695.5 -3 -0.43%
KCBT Red Wheat Mar 2014 697.5 -4 -0.57%
KCBT Red Wheat May 2014 697.25 -4.75 -0.68%
KCBT Red Wheat Jul 2014 688.75 -4 -0.58%
KCBT Red Wheat Sep 2014 699 -3.5 -0.50%
Light crude oil nearby futures in New York rose $1.59 at $95.44 US per barrel.
The Bank of Canada noon rate for the loonie was 95.18 cents US, down from 95.74 cents the previous trading day. The U.S. dollar at noon was $1.0506 Cdn.
