US soy futures rise after worse losses in 6 months

US soy futures rose on Wednesday (July 87) after dropping 5.5 percent in the previous session to more than seven-week low, in sympathy with crude oil and on favourable crop conditions.

 

Corn and wheat also rose, but analysts said the market was unlikely to sustain gains as weak stock markets and crude oil prices will influence grains.

 

Lim Myung-im, a trader at Samsung Futures in Seoul, said that in the absence of major fundamental factors, grains markets are likely to turn lower again and closely follow external developments including G8 summit, major corporate earnings and stock markets.

 

Japan's Nikkei average and oil prices hit six-week lows as investors pulled funds out of bets on the global economy's recovery and favoured safe havens, such as the US dollar and government bonds.

 

Oil fell towards US$62, on course for its sixth consecutive fall and longest losing streak since mid-December, after data showed larger-than-expected builds in US products stocks, reflecting little sign of a recovery in oil demand.

 

Chicago Board of Trade July soy rose 1.2 percent, or 13 cents to US$11.46-A½ a bushel after dropping 66-A½ cents on Tuesday (July 7).

 

July corn rose 0.9 percent to US$3.38-A½ a bushel, while July wheat gained 0.4 percent to US$4.85-A½ a bushel.

 

China's Dalian soy futures, Asia's most active grains market, fell around 2 percent, tracking CBOT's losses in the previous session.

 

The country's soy industry has been speculating on the government's plan to release its reserves after its stockpiling campaign ended last week, a factor that will weigh on the domestic market.

 

Concerns that the Commodities Futures Trading Commission may consider adopting some position limits for index funds to cut down on market speculation also contributed to the weakness in CBOT grain prices on Tuesday.