(Wall Street Journal) – U.S. soybean prices climbed to new highs Thursday on a wave of buying by investment funds betting on lower world crop production and higher U.S. export demand.
The latest rise builds on gains this week as soybean prices reached their highest level in more than eight months. Worries lingered that excessive rains in Argentina had damaged that country’s crop, helping to fuel buying by fund managers and others.
Optimism over demand for U.S. soybean exports also supported prices, with some traders betting that delayed Argentine shipments will encourage international buyers to seek supplies from the U.S. instead.
“Argentina is a significant factor,” said Arlan Suderman, chief commodities economist for brokerage INTL FCStone, noting that some market watchers believe wet weather may have cut that country’s soybean crop by as much as 10 million metric tons.
While skeptical of the estimated drop, Mr. Suderman said “That’s the kind of rhetoric that makes the funds want to own soybeans because the margin of error has gotten much smaller for the U.S. growing season.”
Still, Mr. Suderman said soybean prices likely had reached their near-term highs, with traders now looking to U.S. weather forecasts to help determine the fate of the coming crop. A sharp increase in crop sales by U.S. farmers also limited gains on Thursday, as growers who have for months seen depressed prices aggressively marketed their crops to take advantage of the recent rally. Speculation that U.S. farmers may now plant additional soybean acres due to the upswing in futures prices added to doubts that the market’s rally would be prolonged.
Soybeans for May delivery rose 9 cents, or 0.9%, to $10.18 3/4 a bushel at the Chicago Board of Trade, the highest closing price since Aug. 10.
Meanwhile, corn and wheat futures fell, halting a rally in the grain markets after prices for the crops shot to multimonth highs in the previous session.
Corn prices dropped from a more-than-six-month high notched on Wednesday as traders booked profits following the rally and a surge in crop sales flooded the market with new supplies. U.S. farmers are seeding corn fields at a quick clip, which weighed on the market, while concerns that dry weather in Brazil could curb that country’s output limited losses.
CBOT May corn declined 10 1/4 cents, or 2.6%, to $3.84 1/2 a bushel.
Wheat prices declined from a more-than-five-month high as a recent bout of investor short-covering petered out and traders refocused their attention on still-burdensome domestic and global stockpiles of the grain.
“Wheat will be the anchor of the grain complex,” said Mr. Suderman, adding that many speculative investors have recently closed out of bearish bets. “While there are potential [production] problems out there we’re still far from being in a bull scenario,” he said.
A stronger U.S. dollar and lower prices for crude oil also pressured agricultural markets on Thursday, analysts said. A firmer greenback is unfriendly for U.S. commodity prices like wheat because it makes the crop less affordable for foreign buyers.
CBOT May wheat fell 8 1/2 cents, or 1.7%, to $4.95 3/4 a bushel.
