Soybeans near 10-week high on South America weather concerns
Category: Oilseeds
(Forexpros) – Soybean futures edged higher on Wednesday, re-approaching the previous session’s ten-week high as investors continued to monitor weather conditions in major soybean producing counties in South America.
On the Chicago Mercantile Exchange, soybeans futures for March delivery traded at USD12.2938 a bushel during European morning trade, adding 0.25%.
It earlier rose by as much as 0.58% to trade at a session high of USD12.3462 a bushel. Prices rallied to USD12.4437 on Tuesday, the highest since October 28.
Agricultural meteorologists continued to forecast hot and dry weather conditions across major soybean-growing regions in Argentina, Brazil and Paraguay throughout the next ten days.
According to German-based industry research group Oil World, South American soybean production was expected to fall by 2.9% in the 2011-12 marketing season from the previous year to 132.7 million metric tons.
The soybean crop in Brazil was forecast to decline to 71 million tons from 75.3 million tons in 2010-11, while Paraguay’s production was likely to drop to 7 million tons from 8.37 million tons.
Traders have been focusing on weather conditions and crop prospects in Southern Hemisphere countries in recent weeks, as most Northern Hemisphere grain crops have been harvested by now.
South America is the main competition for U.S. exporters and a smaller crop outlook there would likely mean greater demand for U.S. supplies.
The heat of the Southern Hemisphere’s summer has been compounded by La Niña, a phenomenon in which tropical waters in the Pacific Ocean turn unusually cold.
The La Nina weather pattern typically brings heavier rainfall in Asia and drier weather in South America.
Looking ahead to 2012, many market analysts expect soybean prices to remain supported through the second quarter, citing concerns over South American crops and a pickup in demand from top consumer China.
Financial service providers Goldman Sachs and Commerzbank both projected soybean prices to average USD12.50 a bushel in the second quarter of 2012, while U.K. lender forecast prices to average USD12.60 a bushel during the same period.
Elsewhere on the Chicago Mercantile Exchange, wheat for March delivery declined 0.55% to trade at USD6.5288 a bushel, while corn for March delivery shed 0.25% to trade at USD6.5675 a bushel.
