Soybeans Rise on Concern of Damage as Inventories Slide

June 25th, 2014

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Category: Grains, Oilseeds

Soybeans take a hit(Bloomberg) – Soybeans rose on concerns that excessive rains in the U.S. Midwest will reduce planted area at a time of declining stockpiles and advancing palm oil prices.

U.S. soybean reserves on June 1 were probably 382 million bushels, the smallest for that date since 1977, according to a survey of 26 analysts by Bloomberg News. Area losses for corn and soybeans may reach 2 million acres due to damage from ponding, flooding and hail, Michael Cordonnier, the president of Soybean & Corn Advisor Inc., wrote in a report today.

Soybeans for November delivery rose 0.2 percent to $12.275 a bushel on the Chicago Board of Trade by 5:24 a.m. local time. Futures lost 0.7 percent yesterday, and are headed for a second straight monthly drop.

“We certainly are seeing a little bit of support added to the market from the tightness that we’re seeing in soybeans,” Graydon Chong, an analyst at Rabobank International in Sydney, said by phone. “In the longer term, we’re quite bearish on soybeans given that we’re looking at having a historically large crop.”

Palm oil futures rose as much as 1.2 percent in Malaysia amid concern that dryness will hurt future production. Oil crushed from soybeans competes with palm oil for use in food and bio diesel.

Societe Generale SA sees U.S. soybean inventories at 351 million bushels and expects a “mild bullish reaction” to the old crop numbers. The U.S. Department of Agriculture is scheduled to update its reserve estimates on June 30.

U.S. soybean planting was pegged at 82.21 million acres, up from the USDA’s March forecast of 81.49 million, according to a separate Bloomberg News survey. Production may rise to 98.5 million metric tons in 2014-2015 from 90.5 million tons a year earlier, the Hamburg-based researcher Oil World said yesterday.

Harvested Acres

“It is likely that the eventual harvested acreage for both corn and soybeans will end up lower than what will be reported in the June planted report,” Cordonnier said. “The impact of the flooding may be more important for the soybeans.”

Corn for December delivery dropped 0.5 percent to $4.385 a bushel, declining for a third day.

Wheat for delivery in September fell 0.2 percent to $5.795 a bushel in Chicago. Prices touched $5.7925, matching yesterday’s lowest level for a most-active contract since Feb. 10. Milling wheat for November delivery traded on Euronext in Paris fell 0.7 percent to 185.25 euros ($252) a ton.

“The concern for the moment is that U.S. prices remain uncompetitive in the world markets and that the prices of wheat, corn and soybeans have to fall further still to compete for export trade,” economist Dennis Gartman wrote in his newsletter.

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