Soybean Futures Slide After China Reports GDP Drop -- Daily Grain Highlights
18 January 2024 - 7:30AM
Dow Jones News
By Kirk Maltais
-Soybeans for March delivery fell 1.8% to $12.06 a bushel, on
the Chicago Board of Trade on Wednesday, in response to China's GDP
being reported as lower than expected by economists.
-Corn for March delivery fell 0.3% to $4.42 1/4 a bushel.
-Wheat for March delivery rose 0.1% to $5.81 1/4 a bushel.
HIGHLIGHTS
Weak Showing: A weaker-than-expected showing from China's GDP
had grain analysts and traders attempting to weigh the potential of
slow Chinese buying versus tighter Brazilian output throughout the
day. "There are questions regarding the size of the Brazilian crop,
but right now it is not believed to be small enough to tighten
global balance sheets while Chinese demand remains sluggish," said
Doug Bergman of RCM Alternatives in a note. China's GDP through 4Q
grew by 5.2%, lower than analyst projections.
Stronger Dollar Pressure: A stronger U.S. dollar was another
factor keeping a lid on grain futures. "A rebound in the U.S.
dollar and poor demand are weighing on the grains," said Karl
Setzer of Consus Ag Consulting. The U.S. dollar index rose 0.1% --
which combined with indications of lower U.S. exports had traders
selling -- even with short positions in grains building and called
'oversold' by some analysts.
INSIGHT
Back on the Grind: Egypt's state buying authority is back to
buying in bulk, with it announcing the second tender for March
sought by the country. The resurgence of export demand from one of
the largest buyers is providing wheat futures with a lift, although
export demand from elsewhere continues to look weak. "Although the
U.S. will not get any of the business, it is still demand and takes
world wheat supplies down a notch," said Brian Hoops of Midwest
Market Solutions. Any boost to futures is expected to be
short-lived, said Hoops.
Not Quite Enough: CBOT corn has shed 35% in the past year, with
pressure today coming from better-than-expected Brazilian and
Argentinian yields and output. Corn attempted to turn around from
its latest three-day losing streak, but ultimately finished the day
lower. Market watchers forecast that corn will have difficulty
maintaining a short-term upward trend unless fresh news spurs
trader activity. "Breaking news is absent," said Daniel Flynn of
Price Futures Group in a note.
Potential High: Analysts surveyed by Dow Jones say U.S. ethanol
inventories could rise as high as 25.4 million barrels, which would
be the largest amount of stocks reported by the EIA since March
2023. The EIA pegged supply at 24.37 million barrels last week,
which was more than anticipated and the first time they topped 24
million-barrels since April 2023. Higher stocks may indicate a
reduction in demand for corn-based ethanol fuel.
AHEAD
-The EIA will release its weekly ethanol production and stocks
report at 11 a.m. ET Thursday.
-The USDA will release its weekly export sales report at 8:30
a.m. ET Friday.
-The USDA will release its monthly Cattle on Feed report at 3
p.m. ET Friday.
-The CFTC will release its weekly Commitment of Traders report
at 3:30 p.m. ET Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
January 17, 2024 15:15 ET (20:15 GMT)
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