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Crop Futures Poised for Strong Week as China, Weather Spur Rally - BLOOMBERG
(Bloomberg) -- Soybean futures headed for the biggest weekly gain in more than a year amid a broader grains rally driven by economic stimulus in top importer China and adverse weather in major growing regions.
The rally comes as China, the world’s biggest buyer of soy, unveiled a broad package of monetary stimulus measures. Meanwhile, tropical storm Helene, which slammed into Florida as a hurricane, will bring strong winds to parts of the Corn Belt, potentially delaying fieldwork.
“Helene’s high winds continue to be a problem as well, with high-wind warnings out for much of the eastern Midwest into tonight, where we could see 70 mph gusts into central Indiana,” StoneX chief commodities economist Arlan Suderman said in a note.
Soymeal futures soared as much as 5.8% on Friday, the most since June last year. Short covering and concerns over infrastructure damage for Gulf and other seaboard facilities “created a speculator frenzy” in soymeal trading on Friday, said Terry Reilly, senior agricultural strategist at Marex Group Plc.
Row crop futures are rebounding after slow demand from China and the prospect of bumper harvests in the US sent prices to four-year lows in August. Now, with China’s economy receiving stimulus and the US harvest potentially disrupted, cheap commodities are seeing more purchasing interest, said Evan Basse, grains analyst for Nesvick Trading Group in Nashville.
“Commodities are viewed as cheap relative to equities, which has spurred renewed interest in the commodity markets,” said Basse. “We’ve also seen the dollar decline in recent weeks, which could support demand.”
Soybean futures for November delivery gained as much as 2.7% on Friday, sending prices toward a weekly gain of more than 5% for the week — the most since June 2023. Corn futures for December delivery rose as much as 1.6%, bringing the week’s rally to almost 4%.
Traders are keeping an eye on weather problems throughout the world. Arid conditions are set to persist in northern and central Brazil, lifting corn futures. Wheat is up about 2% this week, with winter grains planting in Russia at an 11-year low due to bad weather, according to consultant SovEcon. In Australia, wheat production is being threatened by dry conditions in the country’s west and severe frosts in the southern regions.
