Soybean commentary: China’s rumored return to US soybean market bolsters bullish momentum from NOPA crush report

While the rumor could not be confirmed by the time of publication, sources told Fastmarkets that current holding and upward reversal in soybean futures would be well-correlated with Chinese interest.

Recent moves in soybean futures have been predicated to a great extent on the anticipation of China’s meaningful return to the US market.

The front-month July contract for soybeans traded on the Chicago Mercantile Exchange settled at $11.30 per bushel on June 16, up by 0.96% from $11.1925 per bu on Monday, while the front-month July CME soybean meal contract settled at $304.80 per tonne, up by 0.93% from $302 per tonne over the period.

China’s potential return to the US market was reflected accordingly in global market prices, with Fastmarkets’ assessments of CIF Barge US Gulf prices rising throughout the forward curve from August to December.

August loading was assessed at 94 cents per bu against Monday’s 88 cents per bu, implying a $3.75 per tonne gain in the same comparison, to $448 per tonne.

Conversely, Brazilian FOB Paranaguá paper market for July was 11 cents per bu lower at 87 cents per bu over the July futures.

The reversal in futures forced traders to recalculate their positions to keep the same balance with the outright offered prices and the buying prices for farmers.

However, the outcome was a marginal $1 per tonne reduction in outright prices day on day to $446 per tonne.

 The soy complex remains governed by speculative moves that have seen fund liquidation skyrocket to multi-decade highs.

The advancing US-Iran peace talks, which promise the reopening of the Strait of Hormuz, have torpedoed crude oil futures, which have in turn dragged down soyoil futures.

Brent crude oil futures continued their decline to trade just shy of $80 per barrel on June 16.

The July CME soybean oil closed at 72.92 cents per lb on June 16, down by 1.95% from 74.37 cents per lb in the same comparison.

In China, the world’s main destination market, the Dalian Commodity Exchange’s soyoil and soymeal contracts rose from the previous trading day.

The most-liquid September soyoil contract was up by 0.20% to close at 8,345 yuan ($1,233) per tonne, and the corresponding soymeal contract rose by 0.14% to 2,945 yuan per tonne.

Soymeal sales in China’s cash market were reported at 302,100 tonnes on Tuesday.

The August soybean CFR China (Brazil) premium was assessed at 230 cents per bu over August CME futures, 10 cents per bu higher from the previous assessment and equivalent to an outright price of $495 per tonne.