US soy futures slip on tight supplies

US soy futures edged lower on Thursday (May 21) after surging to their highest level in nearly eight months on lingering concerns over tight old-crop supplies.

 

Analysts said investors in the grain markets were booking profits after the rally amid declining Asian stocks and easing crude oil prices.

 

The dollar hit its lowest in two months against the yen and Asian stocks fell on Thursday (May 21) after news that the Federal Reserve lowered its forecasts for US economic growth over the next three years.

 

 

The market awaited updates on progress in US plantings, which have reached a critical stage for corn.

 

Genichiro Higaki, head of the proprietary fund management team at Sumitomo Corp in Tokyo, feels that although fundamentals are bullish, it is quite natural that profit-taking type of selling is coming in.

 

Higaki said that corn it is getting a little bit late towards the end of May and the point is how many acres will switch from corn to soy.

 

Corn plantings have lagged the average pace in the eastern Midwest this year due to incessant rains. As a rule of thumb, corn planted after mid-May yields less due to the shorter growing season and autumn frosts.

 

Analysts say farmers may switch more acres to soy, planting for which takes place well into June.

 

Chicago Board of Trade (CBOT) July soy contract fell 2-¼ cents to US$11.66-¾ a bushel after surging to a high of US$11.89-½ on Wednesday (Mar 20). July corn was down 1-¼ cents at US$4.24-¾ a bushel.

 

Traders say they are watching demand from China, which has slowed purchases for July and August arrivals, after booking record quantities in recent months.

 

Wheat prices, which have been climbing on the back of soy, also paused for a breather. July wheat fell half a cent to US$5.97-1/4.