April 13, 2009
CBOT soy rally on lower stocks; corn, wheat fall
Soy futures on the Chicago Board of Trade rose about 1 percent on Monday (April 13), extending last week's rally, which elevated the market to a 2-½ month high, as a report predicted lower closing stocks in the US on strong global demand.
But corn and wheat dropped half a percent each, following a slide in crude oil, which influences grain prices because of their growing use in making biofuels.
Kaname Gokon, a manager with broker Okato Shoji Co. in Tokyo said that the strong soy market indicates a good buying opportunity. He added that soy's price forecast will reach US$10.50 a bushel by the end of this week for the May contract.
Chicago Board of Trade soy for May delivery rose nearly 1 percent, or 9-¾ cents, to US$10.16-¾ per bushel by 0340 GMT, after touching US$10.30-¾ per bushel in the previous session, its highest since January 26. The US Department of Agriculture in its April supply and demand report on Thursday said the soy carryout or ending stocks for the marketing year to Aug. 31 would be 165 million bushels (4.49 million tonnes), below the previous forecast for 185 million bushels (5.03 million tonnes). If so, this would be the smallest soy supply in five years.
On top of this, a severe drought is likely to cut soy production in South America's big three producers: Brazil, Argentina and Paraguay. The drought and farmer unrest in Argentina have led China to increase its purchases of US and Brazilian soy.
The USDA also trimmed its forecast of Argentina's soy crop for this year to 39.0 million tonnes, down from the previous 43.0 million.
A decline in global soy supplies comes at time when importers, led by China, have stepped up imports. China bought 3.86 million tonnes of soy in March, a rise of 66.6 percent from a year earlier and the second highest monthly tally, according to official Customs figures.
The most-active January contract on China's Dalian soy market rose 1.6 percent following gains in Chicago.
CBOT May delivery corn fell 2 cents to US$3.88-¼ and wheat for May delivery was also down 2 cents at US$5.20 per bushel.
