Soybean futures jumped to multi-month highs Monday as China continued forward buying ahead of the inauguration of President-elect Donald J. Trump.
January soybeans at one point soared 20 cents to a multi-month high of $10.65 before closing at $10.56, up 10 cents. December corn slipped 3/5 of a cent to finish at $3.48 1/5.
Analysts say oybean exports to China and speculative money flowing from hedge funds in Europe and Asia, along with selling by producers, has sparked the sharp rally.
“China is getting its purchases in order,” says Don Roose, president of U.S. Commodities in West Des Moines, Iowa, noting that Trump has been critical of China. “You can see its concern," he says, adding that Asian and European hedge funds that open seven hours ahead of the U.S. helped to drive up prices.
Both the Dalian soybeans and Malaysian palm oil were up sharply, driving up the price, according to the marketing firm Water Street Solutions.
Paul Georgy, CEO of Allendale, in McHenry, Ill., points to export demand and a weaker dollar in the Wake Up Call blog as factors “driving buyers’ interest in soybeans.”
USDA weekly soybean exports were reported at 1.898 MMT, up 35% from the previous week. Corn exports were reported at 1.688 MMT, up 2% from the previous week.
November 2017 soybean futures traded overnight at their highest level in two years, according to Joe Vaclavik, founder and president of Standard Grain, in Chicago.
“We’ve had very strong demand. Exports and crush make up 90% of the demand base,” says Vaclavik.
The sharp rally came Monday, even though U.S. soybean producers have lost their competitive edge to producers with weaker currencies, argue some analysts. However, according to Vaclavik, U.S. producers’ lack of selling soybeans consistently may also have contributed to the rally.
“One of the biggest factors in this bean rally may be lack of farmer ownership,” he says.
Many farmers may have sold a large amount of new crop beans very early in the year, according to Vaclavik.
“I don’t think we have the consistent selling on rallies that we have in the corn market,” he says.