Soybean futures gap up on China cargo buying, crop damage

CBOT soybean futures gapped higher Tuesday from the previous close after Chinese crushers had snapped up more than 10 cargoes of US soybeans Monday, while the weekly USDA report highlighted damage to soybean crops due to dry weather.

Soybean futures opened 5-6 c/bu above Monday’s closing prices across the whole of the curve, with the November contract trading at $9.14/bu around 1100 London time Tuesday, still up around 4 c/bu from open.

Chinese state-owned stockpiler Sinograin reportedly bought up to 12 cargoes of US soybeans Monday for shipment between December this year and January next year.

Among those cargoes, five were said to have been contracted out of the US Gulf at 206-210 c/bu over January futures on a CFR China basis.

Cargoes out of the Pacific Northwest were agreed at 197-200 c/bu over January futures.

This was the largest single-day state-backed purchase since the first week of August this year when Cofco bought more than 10 cargoes of US beans in one trading session.

The purchases were made ahead of a scheduled phone call between the US and China governments to discuss the progress of their phase-one deal.

“Both sides agreed to create conditions and an atmosphere to continue to promote the implementation of the Phase One trade agreement,” China’s Ministry of Commerce said in a statement early Tuesday.

Meanwhile, the poorer crop conditions for US soybeans also lent bullishness to the futures.

Hot weather in the US caused the good-to-excellent condition of soybean crops to fall three percentage points week-on-week to 69% this week, exceeding the expectation of a two-percentage-point fall.