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Soybeans Rise on Export Strength

09/16/2020 | 03:26pm

By Kirk Maltais

 

--Soybeans for November delivery rose 2% to $10.11 1/4 a bushel on the Chicago Board of Trade Tuesday on prospects Chinese purchases of U.S. exports will continue at its current level or better.

--Corn for December delivery rose 1.6% to $3.71 3/4 a bushel.

--Wheat for December delivery fell 0.7% to $5.42 a bushel.

 

HIGHLIGHTS

 

Back in Gear: After a brief pause yesterday, the soybean contract on the CBOT resumed its upward momentum. "The bulls are feeling much better this morning... with buyers stepping in on the overnight sell-off," said Doug Bergman of RCM Alternatives before the market opened Wednesday. A streak of Chinese buying of U.S. soybean exports that continued Wednesday has been supporting the strong month for soybeans, but it remains to be seen how long that strength will last. "We have a market that is loaded with speculative longs just as harvest is getting underway," said Mr. Bergman. "If we start to hear more reports of 'better than expected beans', it could spook some of the speculative longs in the market."

Demand Sign: Ethanol inventories declined more than previously expected by analysts, possibly good news for corn farmers looking to ethanol demand to support corn prices. U.S. inventories fell 195,000 barrels in the past week, dropping to 19.8 million barrels. However, daily ethanol production also fell, dropping 15,000 barrels to a rate of 926,000 barrels per day. "The sentiment for corn is mixed now that ethanol stocks are lowest since August 7," said Terry Reilly of Futures International.

 

INSIGHTS

 

Moving Units: Export sales reported by the USDA tomorrow morning are expected to continue to be strong. According to a survey of grains traders by The Wall Street Journal, corn export sales are expected to total anywhere from 750,000 metric tons to 2.2 million tons, while soybean sales are expected to rise as high as 2.8 million tons. In both cases, increased sales of exports to China are expected to be the main driver for the high figures. However, both totals will likely be lower than last week's gargantuan figures of 3.1 million tons and 5.7 million tons, respectively. Those figures included sales announced in the 2019/20 marketing year that have yet to be delivered - something grains traders are watching closely.

Pedal to the Metal: Grains traders are hopeful that China's export appetite will be more robust than previously thought. "China has been a buyer of U.S. soybeans on nearly every day since mid-August," said AgResource. "The almost insatiable China demand for soybeans has some raising the total amount of US soybeans that China will secure to 30-32 million metric tons." Hope of Chinese purchasing actually exceeding expectations is a departure from the prevailing thoughts of traders for most of the year, that Chinese soybean sales wouldn't meet the expectations from the Phase One trade agreement.

 

AHEAD:

 

--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.

--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.

--The USDA releases its weekly grain export inspections data at 11 a.m. ET Monday.

 

Write to Kirk Maltais at kirk.maltais@wsj.com

 

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