China demand will eventually be saturated; Choppy/lower trade in soybeans

December 5, 2016 6:52AM CST

Continued strong palm oil prices and a further overnight advance in Chinese soybeans helped to support the current beans numbers. The higher Brazilian currency and a positive tilt for equity markets, which are up 7.4% from the previous month, but are still at the lowest stocks for November in six years.  We suspect that China’s demand for soybeans will remain strong, but Chinese purchases are already shifting to South America. There is a significant lack of tightness in the US even after the recent surge in demand.  This could be suggesting that the US crop is even larger than has been believed.  We won’t know for sure until the January USDA report, but we would not be surprised if yield and production are adjusted higher.  Basis at the Gulf is down about 60 cents from the 5-year average, and central Illinois basis is about 20 cents under the 5-year average.  Talk of a significant jump in planted area next year could begin to weigh on the marker soon.  January beans closed the week our down 18.5 cents.  Forecasts for Brazil are in agreement for the next 8-14 days with as much as 3-6 inches of rain covering 80% of the region. Support comes in at 1028 ¾.

Soybeans Daily

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