US soy futures nudge higher on crop concerns

 

 

US soy futures edged higher on Thursday (Oct 15) supported by continued harvesting delays in the US and Chinese buying that may lead to near-term supply tightness.

 

Corn and wheat futures eased after solid runs this week driven by the dollar's fall to its lowest in more than a year and fund activity that helped drive corn to a 3-A½ month high and wheat to a new 10-week peak.

 

Worries about weather and harvest progress in the US Midwest also underpinned corn prices, while crude oil running up six straight days of gains and the Dow Jones industrial piercing the 10,000 level added extra support.

 

US farmers are poised to gather a record-large soy crop and a near record-large corn crop, but many producers remain bogged down because of mud and wet grain.

 

Weather will remain unfavourable for crop drying and harvesting throughout the Midwest until Saturday, according to forecaster, Meteorlogix.

 

Soy futures remained near a one-month high with Chicago Board of Trade (CBOT) for November delivery soy rising 0.30 percent to US$9.97 per bushel.

 

The November contract broke through the US$10 per bushel mark on Wednesday before settling up one cent at US$9.94.

 

The late US harvest and reduced exports from South America, where the last crop was hit by drought, meant there would be soy shortages in the near future, Australian Oilseeds Federation said in a report on Thursday.

 

The report said that while this can be expected to place pressure on short-term pricing, the prospects of a large South American crop next year will have a softening impact on prices from the second quarter of 2010.

 

Chinese demand is also helping support prices. The US Department of Agriculture's weekly exports report on Wednesday (Oct 14) said private exporters reported the sale of 110,000 tonnes of US soy to China for delivery during the 2009-10 marketing year.

 

This year China is expected to import about 40 million tonnes of soy, mainly from the US, Brazil and Argentina. The volume of imports dwarfs China's own harvest of around 15 million tonnes.

 

The US corn crop has also been caught by adverse weather slowing harvest progress but prices edged lower on Thursday after jumping 1.5 percent on Wednesday to a 3-A½-month high as a weaker dollar prompted funds to return to commodities markets.

 

Corn for December delivery eased 0.33 percent to US$3.81-A¾ per bushel.

 

Wheat eased after hefty gains this week as fund short-covering drove prices to 10-week highs despite the bearish influence of plentiful global supplies. Wheat for December delivery slipped 0.49 percent to US$5.10-A½ per bushel.

 

Australia and New Zealand Banking Group Ltd Commodity strategist Scott Briggs said there is a speculative rally in CBOT wheat, either on inflation fears or, more likely, short covering.

 

Briggs said the short-covering had eroded the premium that higher protein Kansas City Board of Trade hard red winter (HRW) wheat normally enjoyed, but the premium was likely to be restored once short-covering had run its course.