Grain markets are rallying on rising global demand, as wheat breaks a 4-day losing streak and soybeans hit their highest level in two months.
“With the October Wasde now behind the market, demand is pushing its way to centre stage,” said Tregg Cronin of Halo commodities, referring to an influential US government data release seen on Friday.
“Production changes can happen in November and December, but major alterations are usually relegated to the final production report in January.”
Large exports
Soybeans got a boost from increased ideas of demand.
“Three big demand features have brought fresh buying to the soybeans and helped prices break above the trading range high,” said Mike Zuzolo of Global Commodity Analytics, citing strong US weekly exports, a new export sale to China, and customs data showing the strength of Chinese soybean buying.
US weekly soybean exports were reported at a large 1.8m tonnes.
And a fresh export sale to China, of 240,000 tonnes, was booked for delivery this year on Tuesday.
But Darrell Holiday of Country Futures warned that while this year’s shipment pace is actually slightly ahead of last year “this year’s harvest progress for soybeans is also well ahead of last year’s pace”.
Chinese imports
Customs data from China showed the pace of buying from the last month is well ahead of last year.
Chinese September soybean imports in September were reported at 7.26m tonnes, up 44% from last year, according to customs data.
Imports have fallen for the second consecutive month, but are coming down from record purchases in July.
November soybean futures closed up 2.8% in Chicago, at $9.14 cents a pound, a two-month high.
Middle Eastern buying
Wheat prices have also benefited from rising global demand.
“There’s support from the cash markets on the global sales,” Nick Sax, of Bensonn Quinn commodities, told Agrimoney.com.
“The Middle East has been active,” said Mr Sax, citing recent wheat tenders and purchases from some of the world’s top buyers, including Iran, Iraq, Egypt, and Saudi Arabia, with Japan also tendering for wheat.
Russian prices rise
And prices in Russia, which is a key exporter to Middle Eastern markets are on the rise.
Consultancy SovEcon estimated that prices were up $10 a tonne at $199 a tonne at Black Sea ports, milling wheat.
The rise in prices is being fuelled by a recovery in the rouble, along with weather concerns, and a government downgrade to harvest prospects.
December wheat in Chicago closed up 2.5% at $5.19 a bushel.
Strong sentiment
Mr Holaday also noted a “general commodity buy attitude”.
“There is a feeling in the investment world that the US dollar will weakness and commodities are headed higher,” he said.
“That buying is certainly evident. Much of it is short covering.”
December corn closed up 0.9%, at $3.84 ½ a bushel.
Softs fall back on currency
But coffee and sugar fell back on a sharply weaker Brazilian currency.
Chinese customs data may have proved bearish for soybeans, but it showed overall September commodity imports down for the 11thmonth in a row.
This is bad news for Brazil, a major commodity exporter, as China is its key trading partner.
The Brazilian real sunk 2.7% against the dollar today.
Rally stalls
A weaker real is bearish for sugar and coffee, of which Brazil is the world’s top exporter.
The currency move bought the recent sugar rally to a shuddering halt, after Friday’s eight month peak.
New York raw sugar futures settled down 2.9%, at 13.83 cents a pound.
Brazilian dryness
Arabica coffee also fell back, although ongoing fears of dryness in key regions limited losses.
“Minas Gerais in Brazil has been hot and dry, and the northeast states that produce Robusta are in drought,” said Jack Scoville of Price Futures.
“There are not any real forecasts for rains this week in either area.”
December arabica coffee settled down 0.1%, at 134.35 cents a pound.
November robusta coffee settled down 0.8%, at $1,610 a tonne.
Demand data
But cocoa futures rallied, ahead of some key demand data on Wednesday.
Data on the pace of cocoa grinding, a proxy for demand, will be released for Europe tomorrow, with North American data out on Thursday.
The releases will shed some light on the state of consumer demand in those markets.
London December cocoa jumped 2.4%, to end at £2,141 pounds a tonne, while New York December cocoa settled up 1.7%, at $3,125 a tonne.
