Soybeans soar on demand ideas

(Agriculture.com) – U.S. soybean futures rallied Tuesday, correcting from prior losses on technical buying and market perception of fresh export demand.

The Chicago Board of Trade January soybean future, the most-active contract, settled higher by 22 cents, or 1.9%, at $12.00 1/4 a bushel. The advance follows gains in the two prior trading sessions on reports of China buying U.S. soybeans.

There was speculation of China buying U.S. or South American soybeans, a fundamental feature that helped to underpin the rally in soybeans.

Demand from China, the world’s top soybean buyer, has the ability to push up soybean futures, particularly after prices moved lower in recent weeks on concerns that demand from China was lagging.

“I respect the market’s rally but, without any confirmation of sales and particularly the quantity of the rumored purchases, [it] makes this more a technical bounce than [a rise] tied to demand,” said Rich Nelson, director of research at Allendale Inc. in McHenry, Ill.

The three-day rally was mostly driven by buyers encouraged that prices showed signs of being oversold, after traders were unable to press prices through early October lows.

The combination of light new buying on the lows, backed by renewed speculation of China’s buying, opened the door for a strong correction in soybean prices, said John Kleist, senior analyst with ebottrading.com.

Soybean prices had previously slipped to early October lows, levels that spurred Chinese demand. This occurrence raised traders’ confidence that China would renew its interest in buying U.S. supplies.

Traders also kept some risk premium in the market, unwilling to press prices too low with the uncertainty of future weather on South American crops. The potential for a La Nina weather pattern producing some dryness issues down the road is limiting sellers from being too aggressive.

Meanwhile, corn and wheat futures climbed in unison with soybeans but without a strong export demand base, both markets found it tough to extend their price gains.

Corn and wheat continue to attract selling after rallies, as ample competition in world feed grain markets continue to undercut U.S. prices, said Kleist.

Nevertheless, CBOT December corn rose 12 cents to $6.45 1/2 a bushel. CBOT December wheat ended up 17 cents at $6.32 3/4, KCBT December wheat finished up 13 cents at $7.05, and December MGEX wheat climbed 3 3/4 cents to $9.31 1/4.

Other Markets

CBOT December soyoil ended up 2.7%, or 1.38 cents, at 52.60 cents per pound, and December soymeal ended up $2.20 at $301.40 per short ton.

Ethanol for December delivery ended up 1.1% at $2.680 per gallon. Oats for December delivery rose 3 cents to close at $3.22 a bushel.

-By Andrew Johnson Jr., Dow Jones Newswires; 312-347-4604; Andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires

November 15, 2011 16:12 ET (21:12 GMT)