Wednesday, June 8, 2016

Chinese Import Data Fuels Commodity Price Surge

These are just the agricultural commodities:

Symbol Last Chg
Corn 431-2s+3-4
Soybeans 1177-6s+36-4
Wheat 519-4s+10-4
Cocoa 3092s+19
Coffee 139.65s+7.45
Cotton #2 65.96s+0.12
Sugar #11 19.61s+0.61
Live Cattle 118.600+2.600
Lean Hogs 87.275+1.000

Earlier today I was going to post that, with the exception of maybe lumber and rice, just about everything that trades on the CME/NYMEX; silver, RBOB, oats, you name it was green or UNCH.

From Agrimoney:

The agricultural commodity complex is soaring, amid a perfect storm of weather worries, Chinese demand, and rallying currencies in exporting countries. 

Soybean futures hit a three-year high, corn futures a two year high, while coffee futures rallied nearly 6%, and sugar futures nearly 4%. 

The strength across the complex has many analysts scratching their heads, but some are pointing outside the agricultural space. 

"The rally is not ag specific," said Joe Davis, director of commodity sales at Futures International. 

"It's a macro commodity rally," he said. 

Bullish Chinese demand figures
All the main commodities have been enjoying a bullish session, after data out overnight showed demand from China, the world's top commodity market, were stronger than expected last month. 
"The normal seasonal slowdown in Chinese commodity imports didn't materialise in May, with most commodities recording strong growth," said Daniel Hynes, and Australia and New Zealand Bank. 

Chinese May imports of crude oil, iron ore, and copper were up 38.76%, 22.4%, and 18.6% year on year respectively, lifting oil prices, and the CRB commodity index. 

Dry weather fears
And for soybeans, the Chinese trade balance showed imports at a whopping 7.66m tonnes, up 25% year on year, and up 8.3% from last month. 

But there are other factors spurring strength, in row crops in particular. 

Traders at a major European commodities house said the rally in soybeans was "once again driven on by the hedge funds".

Mr Davis downplayed the effect of weather worries in the US Midwest.  "The funds aren't buying on hot and dry… they are looking for alpha," he said....