U.S. soybean futures end nine-day upturn, with eyes on China

Chicago Board of Trade (CBOT) soybean futures posted double-digit weekly gains, supported by hopes for more export sales to China despite the ongoing coronavirus outbreak, reports Xinhua.

During the trading week ending Feb. 14, the most active soybean contract for March delivery was up 11.75 cents, or 1.33 percent, to close at 8.9375 dollars per bushel, while March corn was down 5.75 cents, or 1.5 percent, to settle at 3.7775 dollars per bushel. March wheat was down 16 cents, or 2.86 percent, to close at 5.4275 dollar per bushel.

CBOT soybean futures rose for nine straight sessions in a row starting Feb. 3, buoyed by upbeat export outlook.

In a monthly supply and demand outlook report released this week from the U.S. Department of Agriculture (USDA), the 2019/20 U.S. soybean export estimates were raised by 50 million bushels, partly reflecting increased imports for China, the world's largest soybean buyer.

The oilseed market got additional support as China continued to roll out measures to facilitate the resumption of production, including soybean crushers affected by the novel coronavirus (COVID-19) outbreak.

Oliver Sloup, vice president of Blue Line Futures, said that 9 dollars per bushel would be psychologically and technically significant if CBOT soybeans can achieve consecutive gains. "I wouldn't be surprised to see an extension towards 9.15, 9.2 (dollars per bushel) here in the near future," he added.

Chicago soybeans ended the nine-day upturn on Friday, amid end-of-week selling to lock in profits before a long U.S. weekend. Still, CBOT soybeans posted double-digit gains week on week.

A stronger dollar capped the rise of U.S. crop futures,said market analysts. The U.S. dollar index, a measure of the dollar against a basket of other major currencies, has risen well above 99, which will make U.S. corps less competitive in international market.

When the dollar strengthens, said Virginia McGathey with McGathey Commodities, "that kind of puts a lid on all of the grains and maybe a little bit of pressure even."

According to the same USDA report, the outlook for 2019/20 U.S. wheat was for stable supplies, increased exports, and decreased ending stocks. Meanwhile, global consumption and ending stocks were lowered fractionally though world ending stocks would remain record large.

Another weekly export sales report for the period of Jan. 31 to Feb. 6 indicated upbeat net U.S. wheat sales, which were pegged at 643,100 metric tons for 2019/20 marketing year. The sales were up 90 percent from the previous week and 10 percent from the prior four-week average.

However, the bullish weekly export sales and neutral supply and demand outlook failed to boost CBOT wheat futures, which ended this week with nearly three percent losses. Analysts attributed the fall to large world supply and declining cash prices.

Russian FOB wheat prices continued to weaken with offer at 220 dollars per metric ton for March, reported the Chicago-based Agricultural research firm AgResource, compared to earlier prices at 230 dollars to 232 dollars for January. As for U.S. corn, USDA confirmed net sales of 968,800 metric tons for 2019/20 in the weekly export sales report, which were down 22 percent from the previous week and 9 percent from the prior four-week average.

Meanwhile, CBOT corn futures found no support from this month's 2019/20 U.S. corn outlook, which was little changed relative to last month. CBOT traders and investors now pin their hopes on pick-up export sales to China, as both Beijing and Washington have recently reaffirmed their commitments to the phase one economic and trade deal.