September 18, 2007

Possible winter damage hikes US soy futures to 3-year highs

Soy futures continued its seventh-day rally as it jumped yesterday (September 17) to a three- year high on fears that freezing weather will damage crops.

Temperatures as low as 28 degrees Fahrenheit (minus 2.8 degrees Celsius) were reported in northern Iowa and southern Minnesota on Sept. 15, data from the National Weather Service show. The freezing temperatures are as much as three weeks early in parts of the Midwest.

According to Han Keon Hee, oils and oilseed head for CJ Corporation, South Korea's biggest food processor, the expected production cut in the US has been a major driver for the current bullish soy market.

Soy futures for November delivery rose as much as 18 cents, or 1.9 percent, to US$9.7275 a bushel, the highest compared with intraday prices since May 2004. They were at US$9.7125 in after- hours electronic trade on the Chicago Board of Trade as of 12:37 p.m. in London.

Prices rose 5.5 percent last week, the biggest jump since the week ended July 13. They have risen 76 percent in the past year.

The government on September 12 said US farmers are seen to reap 2.618 billion bushels of soy this year, less than the 2.625 billion projections in August after record-high US temperatures in August reduced yields. Production is expected to fall 18 percent, after farmers cut planted acreage by 15 percent to sow more corn.

Corn for December delivery gained 4.75 cents, or 1.4 percent, to US$3.5375 a bushel as of 12:38 p.m. in London.