US soy partially recovers from swine flu chaos

US soy futures went higher on Wednesday (April 29) as traders took the view that selling earlier in the week had been overdone, while corn and wheat extended gains on concerns about the slow pace of US planting.

 

Grains dramatically dropped on Monday on worries that swine flu can damage demand for animal feed, even though the flu is not linked to pigs. Rumours that China has been cancelling cargoes also pulled down soy prices on Tuesday although confirmation from Chinese traders didn't affect the recovery.

 

Pat Cogswell, a trader at MF Global Australia said there has been some buying back-in while there's still sowing delays in the US that's helping to support prices.

 

 

Soy futures suffered their biggest one-decline in more than two months on April 27 on fears that the swine flu outbreak could slash global meat consumption and hit demand for feed grains.

 

While swine flu is not transmitted to humans by eating pork, the disease could still reduce meat consumption due to consumer misperceptions, thereby hitting demand for feed grains.

 

Still concerns about the outbreak continue to hit commodity markets, keeping a lid on prices.

 

Traders said the upside for near-month soy futures is being capped by a slowdown in export demand from China that prompted investors on Tuesday to offset their Chicago Board of Trade soy positions --- selling old-crop July and buying new crop November.

 

Traders said Chinese soy buyers have cancelled up to five US soy cargoes since last week

 

Analyst Tim Glass said interest was moving to new crop months but there was also repositioning to reverse a large backwardation that had developed as old-crop months were pumped up on strong export sales to China.

 

July soy has been trading at a US$1 or more premium to November due to strong demand for old-crop beans.

 

The spread has since narrowed to about 83 cents.

 

Corn plantings could be further delayed by cold temperatures and more rain forecast across the US Midwest that could limit field work over the next two weeks.