US soy futures up on aggressive Chinese purchases

China's aggressive buying of US soy boosted US soy futures five percent to more than a two-week high on Thursday (Jul 30).

Corn and wheat gained supported from the rallying soy market, with corn rising three percent and wheat more than one percent.

At 11:40 a.m. CDT, August soy were up 66-1/2 cents per bushel at US$11.24 after rising as high as US$11.29. Corn was up 11 cents at US$3.31-3/4 and wheat was up six cents at US$5.17-1/2.

In addition to bullish supply & demand fundamentals, grains were lifted by soaring equities and crude oil. The broad rally was sparked by fresh economic data suggesting that the recession may be bottoming out.

The renewed optimism whetted investor appetite for risk and sent the dollar lower. A sinking dollar is a buy signal for commodities because a weaker dollar makes US export commodities more attractive to overseas buyers.

"There were good export sales. China is still buying beans and bean supplies will be tight for the next 30 to 45 days," said Paul Haugens, vice president for Newedge USA.

US soy supplies already had been forecast to fall to the lowest level in 32 years, but the market was put on fresh alert by news of fresh sales to China.

The USDA said China bought 1.9 million tonnes, with 1.8 million set to be delivered in the 2009-10 marketing year, which begins on Sept. 1. The balance of 120,000 tonnes were sold for shipment this marketing year.

It was the biggest single sale made to China since 2.24 million tonnes were announced sold just over a year ago, according to USDA data.