Soyabeans jumped into the spotlight for commodity investors this week with prices reaching their highest levels of the year amid voracious demand from China, production problems in Argentina and rapidly declining global stocks.
CBOT May soyabeans rose 5.3 per cent to $10.60 a bushel this week after reaching a six-month high of $10.73 during Friday’s session.
Dealers note that open interest (active positions) has risen strongly as capital flows into the market in anticipation of further price gains. China, the world’s largest importer, is likely to extend a government buying programme for domestically produced soyabeans for two months from April as it remains about 1m tonnes short of its 6m-tonne target.
Chinese traders have been active in both the Brazilian and US markets this week as imported soyabean costs remain lower than the government’s buying price for domestic soyabeans.
In Argentina, the soyabean crop is forecast to fall almost 20 per cent this year owing to drought and pests, raising pressure on US supplies. US stocks are expected to fall below 1m bushels by the end of the current crop year and some traders see further price increases as inevitable to ration demand.
Over the week, CBOT May corn lost 2.1 per cent to $3.82 a bushel while CBOT May wheat added 1 per cent to $5.27 a bushel.
Crude oil prices remained rangebound this week amid concerns about elevated stock levels in the US and the impact of the global economic recession on demand. The International Energy Agency, the energy watchdog, said global demand would fall 2.4m barrels a day to 83.4 m b/d this year and did not rule out a further reduction.
ICE June Brent gained 29 cents to $53.35 a barrel on Friday, down 1.3 per cent this week, while Nymex May West Texas Intermediate rose 35 cents to $50.33 a barrel, down 3.6 per cent this week.
The Singapore Exchange announced on Friday that it would start clearing iron ore swaps by the end of the month, another signal that the market is shifting from the tradition of annually negotiated supply contracts to settle benchmark prices.
“The timing of a cleared swap contract is excellent given the shift from annual pricing to spot pricing,” said John Banaszkiewicz, managing director of Freight Investor Services. Clearing will start on April 27, with the size of each swap at 500 tonnes.
Get alerts on Americas economy when a new story is published