February 12, 2010

 

 

Grains prices have shown signs of stabilization this week following continuous declines since the beginning of this year, but analysts expect the upside to be limited due to ample supplies.

 

Benchmark soybean futures traded on the Chicago Board of Trade were up 2.5% this week, while wheat rose 3.6% and corn gained 3.2%, for their first weekly increases since the release of a bearish January supply-and-demand report by the U.S. Department of Agriculture.

 

"It seems that the market has fully absorbed the negative information in the report and started to stabilize," an analyst at an international commodities trading house said.

 

Benchmark March soybeans were traded at US$9.36 1/2 a bushel at 0748 GMT, down 0.7%. March corn was down 0.2% at US$3.62 1/2 a bushel, and March wheat down 0.9% at US$4.89/bushel.

 

Cold, snowy conditions and lower prices have slowed the movement of soybeans in the U.S., Top Third Ag Marketings Ed Duggan said in a newsletter Thursday.

 

However, "there is no shortage of soybean supplies, just a lack of spot market supplies," Duggan said.

 

The soybean harvest in the U.S. accounts for more than a third of global output.

 

Market participants now expect whopping soybean and corn crops from Brazil and Argentina, the worlds second and third-largest soybean exporters, to come to the market soon.

 

"In my 24 years in the industry, I cant recall another year with growing conditions as ideal as they are this year," said Duggan.

 

Argentinas 2009-10 corn harvest is expected to come in at 19.3 million metric tonnes, 5% more than the last weekly outlook, Buenos Aires Grains Exchange said Thursday.

 

"Hefty global supplies continue to characterise the market and, in our view, are likely to cap rallies, Barclays Capital said in a research note Thursday.