US soy futures rose on possible large auction from China

Chicago soy futures rose on Wednesday (July 29), extending gains to hover around two-week high on speculation that China was in the market to buy more beans from the US.

Analysts said soy prices are likely to be pushed higher if China, the world's top importer, fails to find buyers at its second round of auction later on Wednesday, after last week's sale flopped on higher prices.

China's voracious appetite for soy to crush into soymeal for livestock feed and build its domestic reserve stocks this season has shrunk the US stockpile to a projected 32-year low of 110 million bushels.

There was talk among exporters that China had booked one to two cargoes, or up to 120,000 tonnes for shipment this autumn.

On top of this, US crops are running behind in development due to an unseasonably cool summer. For instance, the US Agriculture Department reported only 20 percent of soy set pods as of Sunday (July 26), versus the five-year pace of 36 percent by late July.

But once harvest gets under way, US farmers will likely reap a record-large soy crop of 3.26 billion bushels and near record in corn of 12.29 billion bushels.

Corn edged higher, while wheat was slightly lower. The corn market has been under pressured by favourable weather conditions and wheat weighed down by weak US exports.

Cool temperatures and satisfactory amounts of rainfall continue to buoy crop prospects in the US corn and soy growing areas. Some dry weather remains a concern in the northwest portion of the crop belt.