May 25, 2011

 

CBOT soy gains as rains threaten US yields

 

 

US soy futures rose nearly 1% on Tuesday (May 24) and new-crop December corn was higher as wet weather delayed plantings in the US Midwest and threatened output in the world's top grains exporter.

 

Soy was on track for its best gains in about a week, supported by a surge in oil prices sparked by an upbeat outlook by Goldman Sachs.

 

Analysts said that, even though farmers made progress sowing the corn and soy crops last week, time was running out to finish plantings and avoid serious yield losses and substantial abandonment of acreage.

 

The USDA late on Monday (Nay 23) said that 79% of the corn crop had been planted, leaving close to 20 million of the intended 92.2 million acres unplanted. Only 41% of the soy crop had been sown, leaving about 45 million left to plant.

 

"You would normally switch from corn to soy, but if it stays wet they may not finish planting either crop, they would just take the insurance money," said an analyst.

 

Spot July corn eased a few cents on profit-taking after a week of solid gains, and wheat also set back on a correction after the past week's strong rebound.

 

Gains in crude oil and a weak dollar lent support to each market but volume was thin, leaving grains and soy vulnerable to sharp price swings.

 

CBOT soy for July delivery was up 9-1/4 cents per bushel at US$13.83. July delivery corn was down 6-1/4 at US$7.47-1/4. New-crop December corn was up 4-3/4 at US$6.75-1/4 and wheat for July delivery was down 7 cents at US$7.96.

 

Goldman Sachs said in a commodities research note on Tuesday (May 24) that weather remained the key for volatile agricultural markets and it expected adverse weather to push US corn prices to new highs.

 

"We still expect a near-term upside to corn prices on stronger demand than currently reflected by the USDA. Sustained planting delays would likely increase the upside to corn prices over the next 12 months while reducing our forecast soy upside," it said.

 

"For wheat, continued poor weather is creating risks of an even larger global deficit than we currently expect and presents an upside risk to our neutral price outlook," Goldman Sachs said.