August 16, 2012

 

 

After a two-day setback and continued concerns about tightening domestic supplies amid the worst US drought in half a century, US soy prices grew 1.3% on Wednesday (Aug 15) on bargain buying.

 

Corn and wheat rebounded after a three-day slide. Soy found support despite cooler temperatures and rains that have brought relief to parts of the Midwest this month, following the hottest July on record.

 

"Even though the weather is non-threatening, we still are looking at the general fundamentals," said Jason Roose, analyst with US Commodities in West Des Moines, Iowa.

 

"The (US soy) stocks are still very tight and farmer holdings are very tight, and the yield is still questionable," Roose said.

 

At the Chicago Board of Trade as of 9:15 a.m. CDT (1415 GMT), benchmark November soys were up US$0.21, or 1.3%, at US$16.19 per bushel. The contract had fallen from Friday's (Aug 10) high of US$16.68 to a low on Tuesday (Aug 14) of US$15.87 before beginning to move up again.

 

"I would say the demand side of the story for soy is certainly more supportive for prices than for corn and we haven't seen the kind of price rationing we need to see," Rabobank analyst Erin FitzPatrick said.

 

Dealers continued to keep a close watch on weather forecasts for the US Midwest crop belt, with predictions of cooler temperatures and scattered rains potentially set to improve yield prospects for late-planted soy.

 

Roose said the rains were helping to fill soy pods and even generating new growth in some fields. Others, however, said light showers this week would be too sparse to ease drought stress in the Midwest.

 

"In fact, the portion of the Midwest under stress could still expand by up to 10% from the current 35% over the next week," CWG meteorologist Joel Widenor said.

 

Frequent rains of 0.50 inch (1.3 centimetres) to 0.60 inch with up to 1.00 inch in some areas were expected from Wednesday (Aug 15) through Friday (Aug 17) in 85-90% of the Midwest and cooler temperatures with highs in the 70s (Fahrenheit) to the 80s, said Andy Karst, a meteorologist for World Weather Inc.

 

"Weather shouldn't be terrible for crops but we're on the edge with a moisture deficit because we still haven't had soaking rains," he said. "It will be drier over the weekend and early next week with the next chance of rain at midweek, and that will be important," Karst said.

 

CBOT December corn rose US$0.06 or 0.76% to US$7.95 a bushel, still well below Friday's (Aug 10) all-time high of US$8.49. September wheat gained US$0.0375, or 0.45%, at US$8.43-1/2 a bushel. Front-month CBOT wheat lost more than 8% in the previous three sessions, the biggest three-day loss since July last year.

 

Dealers said the market remained supported by tightness in supplies of Russian wheat and the possibility that some kind of export controls may be imposed in the next few weeks.