Soybean futures may rally to $9.80 a bushel by the end of July on increasing Chinese demand, Phillip Futures said in an e-mailed report.
“China’s voracious appetite for foreign soybeans is anticipated to increase as imports are more economical compared with domestic supplies,” the report said. “A stronger yuan is likely to widen the gap in profitability between crushing foreign and domestic crop.”
Soybeans for November delivery in Chicago traded at $9.26 a bushel at 5:31 p.m. Singapore time. The most-active contract has fallen 12 percent this year. January-delivery soybeans in Dalian closed at 3,859 yuan ($568) a ton, down 4.4 percent this year. That translates into $15.45 a bushel.
China is the largest consumer of soybeans, ahead of the U.S., which is also the largest producer. The Asian nation’s move on June 19 to allow more flexibility in its currency led to the biggest increase in the yuan in half a decade this week.
The country lifted purchases of the oilseed in the past two weeks to between 17 and 25 cargoes, or as much as 1.5 million metric tons, as crushers expect processing margins to improve, according to a range of estimates from three executives familiar with the trade.
The cargoes were sourced mostly from Latin America except for two from the U.S. Pacific Northwest, they said today. Most shipments will be from July to September, with a few in October and November, said the people who declined to be identified as the transactions are private. Chinese buyers had curbed buying in recent weeks as port inventories surged, they said. Each cargo weighs about 60,000 tons.
On June 22, Scott Briggs, agricultural commodities strategist at Australia & New Zealand Banking Group Ltd., said soybean futures may rally to $10 a bushel within the next two weeks on “short-term tightness” and speculative covering.