China's soybean futures rise as cold snap hits northeast

Source:Reuters-Global Times Published: 2018/9/10 17:38:39

Low temperatures, Trump’s trade war fuel worries over capacity

China's soybean futures climbed nearly 5 percent during morning trade on Monday, on track for their biggest daily gain on record after sudden cold weather in the country's northeast raised concerns about damage to crops.

The most actively traded soybean futures on the Dalian Commodity Exchange, for delivery in January, jumped 4.6 percent to 3,793 yuan ($553.02) per ton.

Investors piled into domestic soybean futures, betting on tight supplies after early frost in parts of the northeast, which could damage yields and the quality of crops.

"There was news that low temperatures in the northeastern provinces including Heilongjiang and Inner Mongolia have hurt soybeans there. Then money went in on the news," said Tian Hao, senior analyst with First Futures.

The average daily temperature in China's northeast region fell to 8.7 C on Saturday, well below the normal level of 16.3 C, according to data on the agriculture weather dashboard of Thomson Reuters Eikon.

The jump also came after US President Donald Trump warned on Friday he was ready to slap tariffs on virtually all Chinese imports into the US, further dampening hopes of an end to a trade war between Beijing and Washington.

China's domestic soybean market is being closely watched as the world's top consumer of the oilseed may rely more heavily on its domestic crop than previously, after China slapped 25 percent tariffs on American cargoes in early July.

Soybeans, crushed to make cooking oil and the protein-rich animal feed ingredient soymeal, were the biggest US agriculture export to China last year at a value of $12.3 billion, according to the US Department of Agriculture.

In July, the buying spree ebbed after China's national soybean and soymeal stocks climbed to a record. China's national soymeal stocks were at 1.18 million tons last week, slightly down from the record high level seen in July at 1.27 million tons.

For the first eight months of this year, China brought in 62 million tons of soybeans, down 2.1 percent compared to the same period a year earlier, according to official data released by the General Administration of Customs on Saturday.

Imports in the coming months before November should be over 7 million tons per month, but supplies might tighten afterward, as Brazil's soybean season nears its end, analysts said.

Newspaper headline: Soybean futures rise as cold snap hits northeast

Posted in: MARKETS

blog comments powered by Disqus