April 29, 2012

 

US soy up 1.5% on strong export demand

 

 

Due to strong export demand for US supplies and to renewed concerns about the crop in South America, US soy rallied 1.5% to their highest in nearly four years on Tuesday (Apr 24).

 

Corn and wheat also rose, supported by forecasts for cold weather that could damage Midwest crops, as well as a weakening dollar that boosted investors' appetite for risky assets, traders said. A higher stock market plus strong crude oil and gold markets also boosted agricultural commodities.

 

Soy hit their highest since July 2008 after Oil World lowered its forecast of Argentina's 2011-12 soy crop to 42.5 million from 44 million because of drought damage. Traders said there was talk of other forecasters lowering their estimate of South American production.

 

The shrinking crop from South America renewed concerns of tightening old-crop supplies as overseas buyers look to the US to fill their import needs. Top buyer China has bought US soy in the past week, a time when South America bears the brunt of the export load.

 

Warm weather throughout March accelerated development of the wheat and allowed farmers to get a fast start to their corn planting, which heightened the risks of a surprise frost damaging the crops.

 

"It is a little early for a weather market," said Ted Seifried, a senior market analyst with the Zaner Group. "Normally we are worried about it if it is too wet to start planting. That is not the issue this year. Now we are worried about a frost for what we do have planted."

 

At 11:16 a.m. CDT (1616 GMT), Chicago Board of Trade May soy was up US$0.22 at US$14.59-1/4 a bushel. The front-month contract topped out at US$14.60-1/2, its highest on a continuous basis since July 21, 2008.

 

CBOT May wheat futures were up US$0.09 at US$6.34 a bushel. Prices briefly rallied through the 30-day moving average for the first time since April 10 before falling back through that key technical resistance point.

 

CBOT wheat hit its highest since April 13 early in the session. CBOT while May corn was 3/4 cent higher at US$6.23-1/4 a bushel, also hitting its highest level since April 13 early in the session.

 

The USDA said exporters sold 480,000 tonnes of US corn to an unknown destination, which traders said was probably China, for delivery during the 2011-12 crop year.

 

"We are having a bit of a rally to ration demand for old-crop corn and old-crop soy," Seifried said.

 

Rainy weather, which could delay planting of corn and soy, followed by a cold snap was forecast for the US Midwest later this week said Don Keeney, a meteorologist for MDA

 

"It will turn colder late in the weekend possibly with freezing temperatures in northern Illinois, eastern Iowa, Wisconsin and Michigan," Keeney said. "Early Monday the freeze line could drop into northeast Indiana and Ohio, we could see some spotty damage to emerging corn and to wheat. We will have to watch that."

 

USDA's weekly crop progress and conditions report showed that US corn seeding was 28% completed as of April 22, the third fastest ever but below the record pace growers established earlier this month. Emergence was pegged at 9%, topping the five-year average of 2%. USDA lowered its estimate of US winter wheat conditions to 63% good to excellent from 64% a week earlier.

 

Soy planting was a record 6% finished, up from 2% a year ago, ahead of the five-year average of 2% Published by HT Syndication with permission from South Asian Media Network.