Soybeans to Rise on Dry Weather, Stronger Chinese Imports

(Bloomberg) – Soybeans for July delivery are set to rise as lingering dry weather in South America further curbs production and China increases imports of the oilseed by 6.3 percent, Oil World said.

The contract may reach $14.50 a bushel “in coming weeks” as South American output falls, the researcher said. Crops are poised to decline in Brazil, expected to be the largest global soybean exporter, and Argentina, its data show. Chinese imports may rise to 55.6 million metric tons in the current 2011-12 season from the prior 52.3 million tons, Oil World said.

“The latest reports about small yields are indeed alarming,” the Hamburg-based researcher said in a report today. “Consumers have become more nervous. China has stepped up purchases and will buy more, as the country is obviously determined to raise soybean imports in coming months to satisfy rising demand and raise reserve stocks.”

July-delivery soybeans slipped 0.1 percent to $13.825 a bushel by 10:32 a.m. on the Chicago Board of Trade after yesterday reaching $13.935, the highest level since September. The contract is up 13 percent this year as dry weather cuts yields in South America.

Smaller Harvests

Global production of the oilseed will fall 22.7 million tons, or 8.5 percent, to 242.9 million tons in 2011-12, Oil World said. Southern Hemisphere output will drop 16.1 million tons, or 12 percent, to 121.5 million tons, it said. Crops in the Northern Hemisphere will slide 5.1 percent, or 6.6 million tons, according to the report.

Chinese imports will rise on accelerated crushing, or processing of soybeans into meal that’s used to make animal feed, Oil World said. Crushing will rise 7.9 percent to 56.3 million tons in the current season from the prior period, the researcher said in the report. The nation is the world’s biggest soybean importer.

“Soybean purchases have picked up noticeably owing to improved crush margins and rising domestic requirements of soy meal,” Oil World said. Imports will climb to “raise reserve stocks as a cushion against any weather problems and soybean crop scare in the U.S. this summer. We assume that this will also require new Chinese purchases of old-crop U.S. soybeans for shipment from April onward.”

To contact the reporter on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.