U.S. soybean futures rebounded from a four-and-a-half-month low on Tuesday, as bargain buying snapped a four-session slide that nearly erased gains from this summer's crippling drought.
Before recovering, soybeans during the trading session had lost more than six per cent since the U.S. Department of Agriculture on Friday raised its U.S. harvest estimate more than expected and increased its outlook for global inventories.
The sharp drop in prices drew buyers back to the market, traders said. Corn, which had been feeling spillover pressure from losses in soybeans, also eked out gains.
"For right now we've gone down far enough to find a little support," said Rich Nelson, chief strategist for Allendale.
January soybeans, the most actively traded contract, rose 0.2 per cent to $14.08 a bushel at the Chicago Board of Trade. Before rising in late trading, the contract fell below $14 for the first time since June 28 (all figures US$).
Nearby November soybeans ended up 1.1 per cent at $14.27 a bushel.
Commodity funds bought an estimated 6,000 soybean and 5,000 corn contracts at the CBOT, traders said. They sold an estimated 3,000 contracts of wheat, which ended lower.
Firm cash markets helped support late gains in soy, traders noted.
Soybean futures began a rally linked to the worst U.S. drought in more than 50 years on June 15 at $13.86 per bushel and hit a record high of $17.94-3/4 on Sept. 4 as fears of dwindling supplies peaked.
Friday's USDA report indicated that "the worst is over" for crop losses, said Tim Hannagan, a grain specialist for Alpari. Soy prices could resume their slide due to easing concerns about tight supplies, he added, particularly if favourable weather promotes crop production in South America.
Technical signals indicate it will be difficult for soybeans to sustain a recovery, as the market fell below its 200-day moving average on Monday, according to analysts.
"The charts for corn, soybeans and wheat are all negative," said Joseph Vaclavik, president of Standard Grain.
Demand in focus
Grain traders are eyeing demand after the USDA provided a clearer view on crop supplies in Friday's report.
Germany's Commerzbank said in a daily note that "the much-reduced price level is likely to lure Chinese buyers back" to the soybean market, although there was no confirmation of new business. China is the world's top soybean importer.
USDA's export inspections of soybeans for the week that ended on Thursday reached 64.1 million bushels, topping trade expectations for 53 million to 59 million bushels.
Weekly corn export inspections of 9.5 million bushels were below expectations for 13 million to 17 million, and wheat export inspections of 10.5 million missed expectations for 12 million to 14 million.
USDA gave corn a slight boost by reporting that private exporters struck deals to sell 158,496 tonnes of U.S. corn to unknown destinations.
However, some traders were disappointed that Egypt, the world's largest wheat importer, did not issued a tender for wheat after Monday's drop in prices.
December corn on Tuesday gained 0.8 per cent to $7.23-1/2 a bushel, while December wheat slipped 0.8 per cent to $8.51 a bushel.
-- Tom Polansek covers agriculture and the CBOT for Reuters from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Ivana Sekularac in Amsterdam.