Technically Speaking

Checking China's Demand

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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September contracts of corn and soybeans on China's Dalian exchange continue to trend gradually higher, showing no sign of breaking lower yet. China has begun buying new-crop corn from the U.S. and is buying large amounts of soybeans from China. (DTN ProphetX chart)

CORN ON THE DALIAN EXCHANGE:

September corn on China's Dalian exchange fell 22 yuan or 0.8% last week to the U.S. equivalent of $10.97 a bushel. The fact that China's corn prices remain so expensive and are trending gradually higher is a somewhat bullish clue China will likely be a large buyer of U.S. corn again in 2021-22. In 2020-21, China has purchased 891 million bushels, so far. China's corn prices did break lower in late March, weakened briefly by concerns about African swine fever that have since eased. With Brazil's corn crop suffering dry weather, China has already started buying new-crop corn from the U.S. and is up to 201 million bushels. Technically, corn's gradual uptrend appears well-supported and is a bullish sign of demand from China.

SOYBEANS ON THE DALIAN EXCHANGE:

September soybeans on China's Dalian exchange closed down 84 yuan or 1.9% for the week ended Friday, May 14. Friday's close was at the U.S. equivalent price of $18.48 a bushel and even though it was down a little on the week, prices in early May have been challenging new highs for 2021. Given Brazil just harvested nearly 5.0 billion bushels of soybeans and shipments out of Brazil hit a new record in April, it is remarkable that China's soybean prices have held consistently above their 100-day average and actually hit a new high of 4,575 yuan on Thursday. Technically speaking, China's soybean prices remain in a persistent uptrend with no sign of breaking support yet.

BRAZIL'S FOB SOYBEAN PRICE:

Brazil's FOB soybean price for June closed down $8.00 per metric ton or 1.4% last week. Friday's close of $568.75 per metric ton was a setback from Wednesday's new high of $591.25, but still looks bullish with prices near this year's high and well above the 100-day average at $530 per metric ton. Fresh from a record harvest, Brazil's soybean prices are well below the U.S. equivalent of $628.25 per metric ton and will continue to earn more export business in the months ahead. Even so, seeing Brazil's soybean price make new highs in early May is also a bullish influence for U.S. soybean prices. Except for one brief interruption in March, Brazil's soybean prices have been trending higher for almost a full year.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of commodities and futures contracts involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at: Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman1

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