February 8, 2012

 

CBOT soy climbs to highest over three months on export prospects

 

 

Chicago soy futures rose to their highest in more than three months on Monday (Feb 6) as demand for US soy was buoyant over supply concerns from drought-hit South America.

 

Wheat prices edged higher but corn slipped, with the market's focus this week on a key crop report to be issued by the USDA on Thursday.

 

China is likely to buy more US soy this quarter as a withering drought is expected to cut the South American harvest, pushing soy prices up to fresh highs.

 

"We're a little more competitive now when you look at price and exchange rates and we're seeing more of those private estimates dropping for South American soy production," said Arlan Suderman, market analyst at Farm Futures magazine.

 

"We need to see harder confirmation of the export business to China but traders are pretty quick to get excited just on the thought and the possibility."

                                                                          

Chicago Board of Trade March soy rose 0.5% or US$0.06 to US$12.38-1/2 a bushel by 9:50 a.m. CST (1550 GMT) after peaking in European trading at US$12.42, the highest level for the front month since late October 2011 . Soy has settled higher four straight sessions.

 

Argentina's 2011-12 soy harvest will be at least 47 million tonnes, a government source said on Monday, while a Reuter's poll showed analysts expect production of 45 million to 50 million tonnes.

 

Closely watched analytics firm Informa Economics lowered its forecast on Friday (Feb 3) for soy production in Argentina and Brazil.

 

Rains have been forecast this week in key growing regions of Argentina but dry weather over the past month was likely to reduce yields in the No. 3 world soy exporter.

 

A stronger US dollar and weaker crude oil and equities overhung grain markets. March CBOT wheat edged up 0.3 % or 1-3/4 cents at US$6.62-1/2 a bushel, underpinned by cold-weather damage to some European winter wheat crops.

 

"People are concerned," one European trader said. "All of Europe is being affected by this freeze."

 

In France, freezing weather is expected to continue in most of the country this week, although minimum temperatures were forecast to be less severe than last week.

CBOT March corn shed 0.5 % or 3-1/2 cents at US$6.41 a bushel, with investors soured by the nearby month's failure to advance higher than US$6.50 last week, Suderman said.

 

In the USDA's supply-demand report on Thursday, the trade expects it to cut estimates for South American soy and corn.