May 2, 2012

 

US soy retreats from nearly four-year high

 

 

As traders booked profits and the market felt pressure from larger than expected deliveries on first notice day, US soy futures retreated from a nearly four-year high on Monday (Apr 30).

 

Soy futures for May delivery, the nearby contract, dropped US$0.13, or 0.9%, to US$14.83-3/4 a bushel at the Chicago Board of Trade by 9:40 a.m. CST (14:40 GMT). Soy for July delivery slipped US$0.07, or 0.5%, to US$14.86-1/2 a bushel.

 

Corn and wheat futures likewise fell.

 

Profit-taking drove soy prices lower after nearby prices topped US$15 a bushel on Friday (Apr 27) on strong demand from China, the world's top importer of the oilseed. The rally took a pause, even though the USDA said on Monday that private exporters struck deals to sell another 220,000 tonnes of soy to China.

 

Soy felt additional pressure from larger-than-expected deliveries of 752 contracts against the May contract on first notice day. Traders had expected there would not be any deliveries because of tight supplies.

 

"Some sort of a correction is due," said Kayla Burkhart, a North Dakota grain merchandiser for CHS.

 

Corn and wheat also felt pressure from profit-taking, traders said.

 

July corn dropped US$0.0125, or 0.2%, to US$6.24 1/4 a bushel. Wheat for July delivery sank US$0.07, or 1.1%, to US$6.43 a bushel. Traders were waiting for an update on corn planting in the US, with the USDA set to issue a weekly crop progress report on Monday afternoon.

 

US farmers had planted 43% of their corn and 13% of their soy as of April 29, with rain and cold temperatures limiting their progress around the Midwest, according to a The Financial Daily poll of 18 analysts. The slowdown was a switch after warm, dry weather allowed farmers to start planting at a rapid pace in March.

 

Chicago corn eased from a three-week high after surging 5% on Friday after the US government confirmed the largest one-day sale of US corn since 1991, with most of it tipped by traders to be for China.

 

Tension in corn and soy has been concentrated in old-crop contracts, which have established a sizable premium over new-crop prices given tight short-term stocks. Analysts say Chinese demand for next season and the need to replenish stocks and ensure farmers plant more crops may fuel forward prices.

 

"We are growing incrementally more bullish on new-crop (corn) prices from current levels, as the early harvest and new-crop feeding required saving the old-crop carryout, will likely pressure new-crop supplies," Morgan Stanley analysts said.

 

The bulk of the massive one-day corn purchase reported Friday was for grain to be harvested next fall, when US farmers were expected to reap a record-large crop.