Chinese buying lifts soy ahead of key U.S. report
SINGAPORE, Oct 8 (Reuters) - U.S. soybean futures jumped 1.3 percent to a one-week top as buying by Chinese traders after a week-long holiday buoyed the market amid expectations of lower output in Brazil and Argentina.
"It seems that with the Chinese market back open it is clearly bringing in some Asian buying in the run-up to the USDA report," said Adam Davis, senior commodity analyst at Merricks Capital, a Melbourne-based fund manager that invests in agriculture.
U.S. Harvest-Iowa soybeans pile up as storage runs out
CHICAGO, Oct 7 (Reuters) - A torrent of freshly harvested soybeans are flooding Iowa, forcing some grain elevators in the top soy-producing state to store the oilseed on the ground, trade sources said on Thursday.
A rapid harvest that followed fast maturation of the crop and ideal weather for running combines have put more than the usual amount of soybeans into the supply pipeline.
Soy product futures ended higher following soybeans, with soyoil the upside leader. Soyoil climbed despite the bearish influence of lower crude oil futures amid strong underlying export demand. "In the past six months bio-diesel production has climbed 92% from a year ago in Argentina and 64% in Brazil, and this elevated bio-diesel production in South America has impacted other markets, the main one being vegetable oil exports," said MaxYield commodity trade advisor Karl Setzer. "Many importers who used to go to South America for soy oil needs are now coming to the United States," he added. December soyoil settled 0.34 cents or 0.8% higher at 44.12 cents per pound. December soymeal ended $0.40 or 0.1% higher at $296.20 per short ton.(Source: CME)
Brazil Farmers Poised To Plant Record Soybean Crop (Source: CME)
Brazil's farmers have just started planting what could turn out to be a record soy crop for the second successive year, but strong demand from countries like China means the extra beans aren't likely to contribute to pressure on prices. Brazil--the world's second-largest soybean producer after the U.S.--is likely to produce more than 69 million metric tons in the upcoming harvest season, topping the 68.5 million tons from last season's crop. Strong demand from importers such as China has kept international prices high, trading above $10 a bushel in recent months, and Eduardo Godoi, an analyst at consultancy Agrural, said that has encouraged Brazil's farmers to plant more land with soybeans and use more inputs such as fertilizer. Godoi sees the crop hitting 69.8 million tons, based on 24.1 million hectares of land planted. Earlier this week, another local consultancy Celeres said it expects 69.1 million tons to be produced.
Although a bumper crop could threaten to lower soybean prices in the months ahead, Steve Cachia, an analyst at consultancy Cerealpar, believes that the hike in output is unlikely to alter prices on the Chicago Board of Trade or in the local market. An extra one million tons of beans from Brazil from the next crop is minimal in the global market, and demand from countries such as China should soak that up, Cachia said. Soy prices have remained high in August and September and farmers have been selling large quantities of their remaining old beans and locking in prices for the new beans from the crop that will be harvested in 2011. Indeed, farmers have already agreed to sell 26% of the 2010-11 soybean crop as of Sept. 31, compared to 18% at the end of August and 11% from the same time a year ago, according to Agrural's Godoi. Still, the main risk on the horizon is the effect of the La Nina weather phenomenon in the months ahead, which can cause prolonged periods of dry weather and loss of crops.
Cooler surface waters off the coasts of South America generally leads to lower rainfall in Brazilian farmland. However, rains fell at the end of September in Mato Grosso and the southern state of Parana, the country's No. 2 soy producer, allowing farmers there to plant their beans in soft, wet soil. Cachia said that there could still be problems in southern Brazil, if there isn't enough rain during the growing period between January through March, as happened in 2008-09.
MPOB Cuts 2010 CPO Output Forecast To Steady Vs 2009 (Source: CME)
Malaysia's crude palm oil output this year will likely be unchanged from 17.6 million metric tons last year, the director-general of the government-linked Malaysian Palm Oil Board said. The MPOB trimmed its previous forecast for a slight output gain due to "bad weather, heavier-than-usual rain that has disrupted harvesting, and stagnant palm oil extraction rates," Mohd. Basri Wahid said on the sidelines of an event. This would be the third consecutive year of zero output growth for Malaysia, the world's second-largest palm oil producer after Indonesia. Though Mohd. Basri didn't give his prediction on CPO prices, slower production growth could catalyse a rise in prices. Palm oil futures on Malaysia's derivatives exchange have risen 4% since the start of the year. The benchmark December contract on Bursa Malaysia Derivatives was trading MYR47 higher at MYR2,777/ton, after rising as much as 2% to MYR2,788/ton, its highest level since May 2008.
Wet weather amid stagnant palm oil extraction rate may curb output towards the end of this year, Mohd. Basri said, even though the oil palm replanting plan is slower than expected. He said the country had only achieved 31%, or 139,000 hectares, of its replanting target of 200,000 hectares announced in 2008, as some planters probably delayed felling of old trees due to high prices. The replanting plan was part of the Government's plan to support prices of palm oil that declined to as low as MYR1,331/ton late 2008, as cutting down 200,000 hectares of old palm trees would have reduced 700,000 tons of palm oil annually. About MYR1,000 is given for a hectare that is replanted. Mohd. Basri said Malaysia may only replant 80,000 hectares in 2010. Many among trade participants said palm oil prices may reach MYR3,000/ton towards the end of the year as above-average rainfall, associated with the La Nina weather condition, may cause floods,
slow harvesting and affect transportation of fresh fruit bunches and extracted oils. While oil palm trees thrive in moist conditions, rising soil moisture can reduce yields.
US corn, soy rise ahead of key USDA report
SYDNEY, Oct 7 (Reuters) - U.S. corn, soybean and wheat futures posted modest gains on Thursday, supported by a weak dollar, although volumes were light ahead of a key U.S. supply/demand report due for release on Friday.
Markets are treading water ahead of the U.S. Department of Agriculture's (USDA) October world agricultural supply and demand estimates (WASDE) report due for release at 1230 GMT on Friday.
Palm at 1-year top on strong demand hopes
KUALA LUMPUR, Oct 7 (Reuters) - Malaysian palm oil hit a near 17-month high on Thursday as traders bet the weak dollar may spur more demand for U.S. priced vegetable oil from top buyers China and India.
The dollar held near a 15-year low on expectations the U.S. Federal Reserve will shift towards a looser monetary policy and spur another round of quantitative easing -- a scenario that has supported equity and commodity markets.
POLL-Malaysia's Sept palm oil stocks at 7-month high
KUALA LUMPUR Oct 7 (Reuters) - Malaysia's Septemberpalm oil stocks probably hit a seven-month high as slightly higher output and imports outpaced overseas and local demand, a Reuters poll showed on Thursday.
Inventories in the world's No. 2 palm producer probably rose 2.5 percent to 1.77 million tonnes, slowing its pace from the 22.6 percent jump in August, a median of five planters showed.
Soyoil to soar in 2011 on food, biofuel demand
MINNEAPOLIS, Oct 6 (Reuters) - Soaring demand for vegetable oils used in food and biofuel will send U.S. soybean oil prices to highs not seen since 2008 despite rising supplies of soyoil and competing palm oil, a renowned oilseed analyst said.
U.S. soyoil futures will reverse recent declines and climb to fresh highs above 45 cents per lb by early 2011, while other edible oils are also poised to appreciate, Thomas Mielke, executive director of Oil World, said on Wednesday.
