Grain Spreads: China Buys Again

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Commentary

Buying in beans picked up this morning and the market turned higher from a lower start and ended on the highs of the day. Sharp weakness in bean oil also was reversed, easing pressure on beans. Yesterday's aggressive US sanctions on Iran included some Chinese firms and China threatened to retaliate which may have been part of the overnight pullback. However, USDA announced a new sale of 136,000 tonnes of beans to Unknown this morning, which was likely China, and that seemed to ease the fears among trend and index following funds. Soybeans slid 1 point to 60% this week, leaving the crop 2 points below the 5-year average. North Dakota fell 7 points, Minnesota dropped 2, South Dakota fell 2, Wisconsin fell 3, Ohio fell 3, and Iowa dipped 1. Technically, today's rally could clear the way to beans re-testing the 12.56 area. This represents 20% higher on year and an important technical level. If we can close above it, the market moves to the gap at 12.98. On the downside a close under 1224, yesterday's settlement, would be seen as bearish in my view and sink price to the 1203/05 area. No trade recs as of this post.  

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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