September 24, 2010

Soy futures go up on increased US export demand

Soy futures advanced, approaching a 15-month high, after government reports showed increasing demand for US supplies.

US shippers sold 120,000 tonnes to China, the USDA said today, bringing this week's total to 741,000 tonnes. Exporters also sold 120,000 tonnes to unknown destinations. Processors used 3.843 million short tonnes in August, up 6.9% from a year earlier, the Census Bureau said today.

"China is in buying US soybeans every day, and that continues to drive prices higher. Soybean demand is phenomenal" because of rising food and animal-feed demand, said Nate Smith, a broker at the Linn Group in Chicago.

Soy futures for November delivery rose 5 cents, or 0.5%, to close at US$10.935 a bushel at 1:15 p.m. on the CBOT. Earlier, the price reached US$10.9825. On September 20, the oilseed climbed to US$10.995, the highest level since June 2009. The commodity has gained 21% since June. 30.

Earlier, prices fell as much as 0.8% on speculation that record US supplies will outpace demand as harvesting accelerates in the next several weeks.

About 8% of the crop was collected as of September 19, compared with 2% a year earlier, the Department of Agriculture said this week. Production will total 3.483 billion bushels, up 3.7% from a record 3.359 billion last year, the USDA said on September 10.

Dry weather next week will firm muddy soils, allowing the harvest to accelerate, World Weather Inc. reported today.

"People fear the bulk of the harvest is just ahead. It's going to be a big crop, but demand will also be record large," said Dan Basse, the president of AgResource Co. in Chicago.

Government figures show that the US soy crop was valued at US$31.8 billion last year, second only to corn at US$48.6 billion.