Soybeans Bounce Back as Traders View Correction as Overstated
By Kirk Maltais
-- Soybeans for July delivery rose 5% to $13.96 a bushel on the
Chicago Board of Trade Friday, with traders taking Thursday's steep
drop as an opportunity to buy back into futures.
-- Wheat for July delivery rose 3.7% to 6.62 3/4 a bushel.
-- Corn for July delivery rose 3.5% to $6.55 1/4 a bushel.
Oversold: Selling seen in grains Thursday appears to have been
overdone, with wet weather seen as not being enough to alleviate
dryness issues in certain growing areas.
"This week's hot/dry weather has really battered Western,
Midwest and Northern Plains crops according to producer sources
with yield potential to fall off the table unless immediate soaking
rainfall arrives," said AgResource. "By soaking rainfall, we mean
2-4 inches, not the dust settling rains that 20% of Iowa has
received in recent days."
Weather models showing increased rainfall across growing areas
were a pressure point for grains in trading Thursday, along with
Buyers Back In: "Thursday's collapse was bound to attract some
buying, but there was fundamental support as well," said Arlan
Suderman of StoneX.
For many traders, Thursday's selling was seen as
disproportionate to macro conditions and rainfall hitting some
growing areas, albeit not all.
Sign of the Times: Thursday's big selloff is "a sign of things
to come," according to Capital Economics.
"The scale of this week's fall in commodity prices is ...
consistent with our assessment that much of the rally over the last
year or so has been led by investor speculation as opposed to a
genuine improvement in the underlying fundamentals," the firm said
Slowdowns in China's economy are expected to further impact
metals prices, while in agriculture, decent weather in the U.S.
supports stronger-than-expected crop production.
"We think that higher U.S. production and subdued global
consumption growth will help to tip the global market into a
surplus in 2021/22," Capital Economics said.
Piqued Interest: Lower prices for U.S. grain futures are
expected to bring China back to purchasing more U.S. grain exports,
said Daniel Flynn of the Price Futures Group. Underlying
fundamentals make grain traders think that a sustained turnaround
could be in the cards, he added.
"We have a weak carryover market and if the weather forecasts
continue to change, reality will come into place," he said. "It is
not what you plant but what you grow."
-- The USDA is scheduled to release its weekly export
inspections report at 11 a.m. EDT Monday.
-- The CFTC is due to release its weekly commitments of traders
report at 3:30 p.m. EDT Monday. The report was scheduled for
Friday, but was delayed because of observance of the Juneteenth
-- The USDA is scheduled to release its weekly crop progress
report at 4 p.m. EDT Monday.
-- The USDA is due to release its monthly cold storage report at
3 p.m. EDT Tuesday.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires
June 18, 2021 15:34 ET (19:34 GMT)
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