Soybeans rise on export demand

April 18th, 2012


Category: Oilseeds

Soybeans take a hit( – U.S. soybean futures ended higher, supported by hopes for more export demand and ongoing concerns about tightening supplies.

Soybeans for May delivery rose 5 3/4 cents to $14.25 3/4 a bushel at the Chicago Board of Trade, leaving the contract within its trading range of the last week. May soymeal rose $2.40 to $393.80 a short ton, and May soy oil gained 0.1 cent to 55.76 cents a pound.

Prices rose, thanks to signs of continued export demand from China, the world’s largest importer of soybeans.

The U.S. Department of Agriculture on Tuesday reported the sale of 225,000 metric tons of soybeans for delivery to “unknown destinations,” which many traders assume means China. And overnight, the state-backed China National Grain and Oils Information Center said China is expected to import 4.63 million metric tons of soybeans this month, much higher than the 3.88 million tons imported last April.

Concerns also resurged about supplies growing tighter in coming months, with analysts expecting lower soybean output in Brazil and Argentina due to drought.

In the U.S., traders said high soybean prices are needed to attract farmers to plant more of the crop in place of alternatives such as corn.

“There’s definitely the risk that we haven’t done enough work to ensure sufficient acres switching over to soybeans,” said Tregg Cronin, market analyst at Country Hedging.

Outside markets also supported soybeans, with equities and crude oil higher.

Still, traders remain concerned that a large build-up of long positions in soybeans by managed funds could have the market at risk of a sharp drop if many market participants look to sell. Concerns about lower South American output and U.S. planted acres may already be sufficiently priced into futures, some analysts said.

Also, high soy prices and expectations for an early harvest of the U.S. winter-wheat crop have some analysts predicting a rise in “double cropping” this year, where farmers plant their land with soy right after harvesting wheat from it. If that practice is more common than usual this year, it could boost the size of the U.S. soy crop and weigh on prices.

Separately, corn and wheat futures closed mostly lower, after early support from outside markets and short-covering waned. For corn, traders refocused on expectations for a large U.S. crop this year to weigh on prices.

CBOT May corn ended down 6 1/2 cents at $6.16 3/4 a bushel, a more-than-two-week low.

Wheat futures followed corn lower and were also pressured by large world supplies. Market participants appeared to be buying soybeans while selling corn or wheat in “spread” trades, since soy has the strongest outlook of the three crops for tight supplies and strong demand, traders said.

CBOT May wheat ended down 3/4 cent at $6.15 1/2 a bushel, a more-than-two-week low. Kansas City Board of Trade May wheat rose 1 1/2 cents to $6.32 a bushel, and MGEX May wheat fell 7 cents to $8.08 1/2 a bushel.

-By Owen Fletcher, Dow Jones Newswires; 312-750-4120 begin_of_the_skype_highlighting 312-750-4120 end_of_the_skype_highlighting;

(END) Dow Jones Newswires

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