(AgProfessional) – U.S. soybean futures resumed their rise on Thursday, trading near a 21-month high set earlier this week after the United States Department of Agriculture (USDA) forecast tighter global supplies than expected.
“Market focus is again back on the USDA’s forecasts of tighter U.S. and global soybean inventories today which is strongly supporting soybeans,” said Frank Rijkers, agrifood economist at ABN AMRO Bank. “Corn and wheat are being pulled up by spillover support from soybeans despite both grains facing a bearish outlook with plentiful supplies.”
Chicago Board of Trade most active July soybeans rose 0.8 percent to $10.87-3/4 a bushel at 1019 GMT after falling on Wednesday on profit-taking. Most active July corn climbed 0.9 percent to $3.81 a bushel.
Most active July wheat rose 0.8 percent to $4.62-3/4 a bushel. Both had also dropped on Wednesday.
Soybeans hit their highest since July 2014 at $10.91-1/2 a bushel on Tuesday after the USDA surprised the market with a lower-than-expected forecast of U.S. and world soybean inventories.
Markets had previously been expecting larger stocks partly because of expectations of bumper South American crops.
“Soybeans are facing a tighter global supply outlook than previously expected, with rain seeming to have caused significant damage to the soybean crop in Argentina where harvesting is now underway,” Rijkers said. “Rain damage to Argentina’s crop could transfer export demand for soybeans to the United States and other countries. Chinese soybean demand also remains robust.”
In China, Dalian soymeal jumped more than 5 percent after closing nearly 2 percent up on Wednesday. Dalian Soybeans gained 0.7 percent.
“Wheat and corn are rising despite the forecast of large inventories from the USDA. I have doubts about whether the rises are sustainable, especially for wheat because of the plentiful world supplies,” Rijkers said.
The USDA on Tuesday projected that U.S. inventories of both corn and wheat would rise by the end of the 2016-17 marketing year to their highest levels since the 1980s.
