May soybeans were up 3 cents late in the overnight session. China futures were slightly higher, led by higher edible oil markets. Malaysia palm oil futures were up 0.3%. Outside market forces were supportive overnight, as a surge in equity markets appeared to be more supportive than a weaker tone for energy markets. There were no deliveries against the March soybeans overnight. Meal deliveries came in at 2,175 contracts with oil at 2,654. May soybeans have already recovered more than half of their losses from the February break, and news of a slow harvest in Brazil plus news of another port strike in Argentina are seen as positive forces. If Argentina products cannot move, short-term demand for meal and oil from the US could get a boost. The United Nations indicated that global food prices hit a record high in February. The Chinese government could be concerned with rising food prices and the potential for civil unrest, so traders believe that imports will remain active, maybe more than normal, if they decide to replenish reserves. While there are no details yet, the China's Vice Minister of Commerce indicated that they will cut tariffs and red tape to boost imports. Traders suspect that items like vegetable oils may be priority. China is an active importer of palm oil and in recent months soybean oil. Global palm oil production is close to 45 million tonnes, and China buys about 7 million tonnes of it per year. Reduced concern over problems in Libya and a lower energy market overnight were seen as positive forces. May soybeans ended a choppy session yesterday up 19 cents on the day, their highest close since February 17th. Ideas that wet weather in Brazil will keep harvest slow, higher energy prices, and talk that China may be in the process of lifting price controls for vegetable oil markets helped to support the strong gains early in the session. Traders noted soybean/corn spreading as active early in the day. There is also talk that Chinese soybean buyers are active this week, buying old crop soybeans from Brazil and new crop from the US. May soybean oil traded to its highest level since February 18th yesterday with talk of better biodiesel demand ahead due to higher energy prices. Brazil and Argentina combined were said to have used 3.9 million tonnes of soybean oil for bio-diesel production in 2010. Traders will monitor weekly export sales today.
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