US soyabean futures rose 1 percent on Thursday, closing out a generally lacklustre year for the grains markets on a strong note as analysts looked for funds and China to revive the market's stalled rally. Weighed down by bumper crops and a global recession, wheat, corn and soyabeans have struggled this year in comparison with commodities such as oil and copper to pick themselves up from 2008's slump, which had ended three years of rising prices.
Overall, commodity markets were on course for their strongest year since 1973. Buoyed on Thursday by a US Agriculture Department export report showed continued good demand from Chinese buyers, Chicago Board of Trade soyabeans are set to end the year up 8 percent, halving last year's loss, but corn will eke out only a 2.5 percent increase while wheat will fall more than 10 percent, dropping to less than half its peak in the precrisis days of 2008.
The themes for next year: investment flows, swelling stocks and the China demand story, a mix of factors that has led this year's most-accurate analysts to very different outlooks. At 12:27 pm CST (1827 GMT), soyabean futures for January delivery were up 14 cents at $10.50-1/4 a bushel. CBOT March wheat was up 4-3/4 cents at $5.49-1/2 a bushel and CBOT March corn was up 2-1/4 cents at $4.16 a bushel.
CHINA BUOYS BEANS The soyabean market was receiving support from traders that need to cover shorts following sharp price declines last week, and from further signs of robust Chinese demand. "We continue to see good strong exports (with buying) from China all week long." said Jason Roose, analyst with brokerage US Commodities in West Des Moines, Iowa. "That continues to be the basis for this market."
Good overseas demand for China has supported soyabean prices following last year's 19 percent loss. A poor crop from South America in 2009 also fuelled this year's rally. Expectations of bumper soya production in South America, which comes on top of record-high US output this year, will likely weigh on prices in 2010, analysts said.
The US Agriculture Department on Thursday morning said export sales of soyabeans were 1.075 million tonnes, within the range of estimates for 800,000 to 1,200,000 tonnes. Chinese purchases accounted for nearly half - 531,500 tonnes - of the weekly total.
Corn - which edged higher in thin trade ahead of the New Year holiday on Friday - rose in 2009 as inflows of managed money drove the oversold market 20 percent higher this quarter. Corn prices also received support during the last few months of the year from cold and wet weather that stalled the tail end of harvest in the Midwest.
Funds have also shown interest in wheat in the past few months, with prices up 19 percent in the fourth quarter, its best performance since the third quarter of 2007. Wheat has been under pressure throughout the year from a global supply glut, which has dragged the market down in 2009, following a loss of 31 percent in 2008.
"The agricultural markets have been negatively influenced by very strong supply response this year," said Mark Pervan, head of commodity research at ANZ in Melbourne. "High prices have resulted in more acreage, resulting in a big supply response."
The US dollar, which has been a key factor in the commodity markets, held near 3-1/2 month highs on a broadly soft Japanese yen on Thursday. A strong dollar makes US commodities less attractive for overseas buyers. The soyabean market is expecting a big crop from South America, the world's biggest soya-producing region, on good weather and higher acreage in Brazil and Argentina.
Traders were on watch to see if Chinese buyers turn their attention away from US soyabeans as the crops from Brazil and Argentina are harvested during the next few months. Brazil's soya and corn crops in major grain-producing state Parana are developing well and yields are expected to be among the highest, helped by abundant rains in recent months, officials and market sources said. China is expected to import 12 million tonnes of soyabeans in the first quarter, up 2 million tonnes from the previous quarter, creating a surplus, according to a report by an official grain think tank this week.
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