Chinese Demand for U.S. Soybeans Hanging On Longer Than Expected

February 6, 2012 12:20 AM

What Traders are Talking About:

* China shopping for U.S. soybeans? Talk continues to swirl through the marketplace that China will be a more active buyer of U.S. soybeans through the first quarter of this calendar year than previously expected. Harvest delays in Mato Grosso, Brazil, have caused shipping delays of up to two weeks at Brazilian ports. Exporters are already turning to U.S. supplies on optional origin purchases and there's talk that even more business could be switched to the United States. In addition to the harvest/shipping delays, there are also quality concerns given persistent late-season rains in central and northern production areas of Brazil.

The long and short of it: As long as there is talk of Chinese interest in U.S. soybeans, downside risk is limited and upside potential is open for soybean futures.

* Rainy weekend, more rains this week in South America. Rains of one-quarter to one inch were generally seen across Rio Grande do Sul, Brazil, while Parana, Brazil, saw slightly lesser rainfall over the weekend. More precip is forecast through Thursday this week. In Argentina, rains were generally 0.3 to 1 inch across the main corn and soybean areas over the weekend. Rains are forecast to continue through Wednesday. Meanwhile, scattered rains are likely to continue across areas of Mato Grosso, Brazil, causing more harvest delays there.

The long and short of it: Rains will continue to benefit soybeans and some late-planted corn. But rains are too late to help much of the early planted corn crop and soybeans in areas hit hardest by earlier drought.

* World watches Greece. The euro is under pressure and the U.S. dollar index is higher to start the week amid concerns Greece will not accept terms needed to secure the next round of bailout funds and potentially avoid a sovereign debt default. The three coalition parties in the Greek government are under pressure to tell the European Union if they agree to wage cuts and other reforms proposed in return for a 130 billion euro rescue deal. There are reports the deadline for a decision from Greece is 4 p.m. CT today, although there are also reports citing unnamed Greek government sources saying there is no such deadline.

The long and short of it: The big question today is whether grain and soy traders can look past the fiscal uncertainties in Greece.


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