May 27, 2010

Soy futures advanced on speculation that the US government will report higher demand from crushers and that La Nina weather conditions may hurt the crop.

La Nina may cause dry weather in late summer, hurting the US soy crop, said analysts. There is a "growing possibility" of La Nina developing during the second half of 2010, the US Climate Prediction Center said. The US census bureau is scheduled to release a report on April soy crushing by US processors today.

"Until we get a more certain view of the ultimate production size, there is the potential for the market to price in a yield risk premium," Toby Hassall, a research analyst at CWA Global Markets Pty said. There is also some positioning in the market ahead of the US soy crush report.

The USDA forecast on May 11 that China's corn output will drop 6.6% to 155 million tonnes in the year ending Sept. 30, and demand will match that output.

Wheat for July delivery was unchanged at US$4.6175 a bushel in Chicago, reversing a loss of as much as 0.8%.