Is Soybean Market in for Rocky Ride?
Mar 17, 2014
Grains were off sharply in the night session with wheat leading the complex to the downside on a 14-cent drop. Beans and corn were lower by 12 and 8 cents, respectively, in the overnight trade.
Wheat started the week on a positive front with front-month May futures hitting $6.94, but quickly gave up the gains and turned negative by the end of night trade. Friday’s CFTC Commitment of Traders report showed non-commercial traders trimmed their net short in CBOT wheat to 25,402 contracts as of Tuesday, a cut of about 14,000, but far less than many had been expecting.
Over the weekend Crimea strongly voted to join Russia with a 96% approval rating at the polls. While the geopolitical risk continues, trade with Ukraine continues to be largely unaffected. Last week Ukraine had its largest weekly corn exports of the season with nearly 700,000 MT shipped. Despite the situation in Ukraine and Russia, the export activity remains strong in the Black Sea area. However, the activity remains disappointing for the wheat as only 10,000 MT were shipped during the last 15 days. Even if wheat availabilities remain real in Ukraine, international buyers give the priority to Russian origins. Nevertheless, wheat stocks inside harbors are abundant at 300,000 MT.
Overnight, China's top agriculture bank urged Beijing to speed up the sale of its state grain and cotton reserves, now at record high levels, to help ease the bank's mounting debts. There has already been pressure on beans in the past week from China canceling soybean deals with Brazil, so if the world’s #1 buyer continues to balk at purchases, the soybean market could be in for a rough ride lower.