January 21, 2010

US soy futures bounce on Chinese economic growth

 

US soy futures bounced higher on Thursday (Jan 21) after strong Chinese economic growth data rekindled hopes of continued strong imports by the world's most populous nation.

Soy traded at a 2-½ month low on Wednesday on worry that China might follow small steps this month to tighten monetary policy with sharper measures to stem inflation, but strong economic fourth quarter growth in China reversed sentiment.

China's annual gross domestic product growth accelerated in the fourth quarter to 10.7% from 8.9% in the third quarter, the National Bureau of Statistics (NBS) said.

But China's central bank has so far avoided hiking its key interest rate and stayed with a gradual measure of guiding yield on its three-month bills higher on Thursday, the second time this year it has used the method to highlight concern about inflation caused by rapid economic growth.

Corn held steady and wheat futures drifted lower with the market in no mood to pay high prices because of ample global stocks.

MF Global Australia trader Garry Booth said index funds had reduced their positions across many commodity markets in recent weeks but were now looking in a more friendly way at the grains market, starting with soy.

Chicago Board of Trade soy futures for March delivery rose 0.39% to US$9.53-¾ per bushel while March corn was steady at US$3.68 per bushel. March wheat lost 0.40% to US$4.95-½ per bushel.

"The funds are still concerned abut the fundamentals of corn and wheat but the beans have better support because demand from China remains very high," said Booth.

Technical analysts also suggest that soy have bounced off lows and are looking at levels over US$10 per bushel again, last seen on January 11.

Booth said although corn and wheat were lower some technical analysts see both commodities moving into zones of good support even though there was more interest in soy at present.