Soft commodities, particularly grains, and beans, have seen strong moves in the last 2 weeks on the back of China’s purchasing of U.S agricultural Crops.
Typhoons Maysak has brought flooding to parts of China’s North East, their top producing corn and soybean region. This has prompted speculative traders to bet on China continuing to buy even more U.S. agricultural crops as they remain committed to the USD 50 billion phase 1 deal.
A 12% move in the last 4 weeks, of which 7.5% has been in the last 2 weeks has resulted in the strongest move of 2020. Soybeans are now at the highest level since June 2018 with the futures hitting a high at 969 ½ as of 10.30 GMT (source Bloomberg).
The big question is are we about to enter a genuine bull trend, or will the buying dry up and cause a correction? 961 was the key resistance and double top in the, making it very significant. If the futures can hold above this level then the chance of a genuine bull run will increase, leaving farmers to dream about the 1,100 level last seen in 2019.
It is still early days and the eggs are currently all in a Chinese basket, but maybe, just maybe that could be enough to make the Soybean farmers year!