CHICAGO - A surge of demand
from China lifted soybean futures to nearly three-week highs Friday
at the Chicago Board of Trade.
Product markets also rallied, with soybean meal
setting contract highs and soy oil rebounding from rebounding from
contract lows.
China, typically a reliable buyer of U.S. soybeans,
entered the market much more aggressively than usual this week, snapping
up 400,000 to 600,000 metric tons (440,000 to 660,00 short tons),
according to people close to the U.S. export market. This is the most
beans China ever bought from the U.S. in such short period, and some
observers think the total will actually be closer to 850,000 tons.
The U.S. Department of Agriculture confirmed some of the sales.
Nearby March soybeans soared 6.5 cents to $5.145
a bushel, the highest settlement since late last month. Nearby March
soybean meal rose $1.80 a ton to $168.60 a ton, and nearby March soy
oil rose 0.20 cent to 15.69 cents a pound.
"You've got a market that
seems to have the China syndrome," said Don Roose, analyst with consulting
firm U.S. Commodities in West Des Moines, Iowa, "The rumors continue
to accelerate about the volume they bought."
Usually,
China begins looking to South America for beans around this time of
year, Mr. Roose said. But with rains in northern Brazil interrupting
the harvest there, China's commercial buyers turned north, paying
a bit extra for U.S. product in hopes of getting it sooner. |
China
is among the largest customers of U.S. soybeans. Since the start of
the crop year last Sept. 1, it has purchased 1.94 million metric tons,
the USDA said. Most of those beans will be crushed into meal to feed
livestock.
Mr. Roose and
other analysts think China's latest purchases mean the USDA will have
to raise its estimate for total U.S. soybean exports during the 1999/2000-crop
year. The current projection is 890 million bushels - already the
highest in almost two decades.
There may be about a six-week export "window" to
China for the U.S. bean market before South America's crops are ready
and before China harvests its rapeseed crop, said Dick Loewy, analyst
with Chicago consulting firm AgResource Co. After the window closes,
however, the party for U.S. bean exporters could end, he added. South
America's harvest usually begins in earnest starting in March.
Meanwhile, traders at the CBOT talked up South American
weather, noting that dryness is expected for key regions of southern
Brazil in the coming days. Brazil's soybean crop already has been
hurt by lack of rain, and the USDA recently trimmed its estimate for
Brazilian production by 500,000 metric tons.
If traders arrive back at the CBOT after the holiday
weekend to news of continued parched South American conditions and
more Chinese buying, futures could keep climbing.
"It will continue to rally," a CBOT soybean trader
said. He pegged the next technical resistance for March bean futures
at around $5.21 a bushel.
|
