US soy futures continue to rally on China demand

 

 

US soy led grains and oilseed futures higher on Wednesday (April 21) as traders took encouragement from China's demand for new-crop beans, running at about twice the pace of a year ago.

 

CBOT soy for May delivery rose 0.28% to US$9.86-¾ per bushel in early Asian trade, heading towards the next resistance level of US$10.20 per bushel that technical charts show for the nearby soybean contract.

 

Wheat futures also continued to recover from sharp losses earlier in the week as a short-covering rally continued after prices rose nearly 4% on Tuesday.

 

A mostly bearish supply situation saw investment funds build a huge short position in CBOT wheat. Many used Monday's 4.6% drop as an excuse to unwind some of their bets for further market declines.

 

A recovery in oil prices helped support corn prices on Wednesday as traders ignored prospects of the second largest US crop on record in 2010 and bumper crops being harvested in South America.

 

Meanwhile, private exporters reported the sale of 232,000 tonnes of US soy for delivery to China in the next marketing year, according to the USDA.

 

China is now consuming more soymeal for use as feed for livestock than the US as more meat is consumed in the fast-growing economy.

 

Meanwhile, CBOT wheat has fallen 10.2% so far this year even after Tuesday's rally that saw the front-month contract jump nearly 4% on a short covering and traders taking advantage of a sharp drop earlier un the week.

 

Corn remains vulnerable to move lower on supply fundamentals as bumper crops are harvested in South America and as good weather allows US Midwest farmers to continue seeding what is expected to be the second largest corn acreage ever harvested in the US

 

US stocks rose on Tuesday as oil prices lifted energy shares and investors were upbeat about the overall profits recovery, even as some high-profile results fell short of lofty expectations.