July 1, 2010

Soy futures advanced in Chicago on signs supplies from the US may tighten before the next harvest as dry weather threatens the crop in northeast China.

November-delivery soy rose as much as 0.7% to US$9.09 a bushel on the CBOT and were at US$9.075 a bushel at 1:53 p.m. Singapore time. The most-active contract declined for a second straight quarter in the three-month period to June 30.

Soy stockpiles left over from last year's crop totaled 571 million bushels as of June 1, the smallest since 2004, the USDA said yesterday. Soy and corn crops in northeast China "appear to be somewhat at risk due to periodic hot weather," Telvent DTN Inc. said yesterday.

"That's something the market has been focusing some attention on: the Chinese weather outlook," Toby Hassall, a research analyst at CWA Global Markets Pty, said. Unfavourable weather may hurt crops in China, boosting the nation's imports, which have "proven to be a supportive factor" for prices.

Northeast China, the country's top soy-producing area, is experiencing dry weather as stockpiles in its biggest supplier, the US, declined 4.2% as of June 1, from 596 million bushels a year earlier.

Corn for December delivery declined 0.5% to US$3.7175 a bushel, after gaining as much as 0.4% earlier.

Futures yesterday jumped 8.6%, the biggest surge since September 15, after the USDA said farmers in the US, the largest grower and exporter, planted less than they intended in March and inventories from last year's record crop were smaller than expected.

China, a net corn exporter until last year, is purchasing the most grain in 14 years as inventories in the US decline.

Wheat for September delivery fell 0.3% to US$4.7875 a bushel at 2:14 p.m. Singapore time, after trading between US$0.7825 and US$4.82 a bushel.