U.S. soybeans jumped three per cent on Tuesday, the biggest advance in seven months, on concerns about crop prospects in Argentina following disappointing rainfall and as China returns to the buy-side of the soybean market after the Lunar holiday.
Soybeans also gained support from slow shipments from Brazil, as well as technical buying on follow-through from an upturn late last week after the market hit a one-month low on commodity fund long-liquidation.
"We saw a shift in momentum late last week so it's technical and also the rains in Argentina, particularly in the south, were disappointing," said Sterling Smith, futures specialist for Citigroup.
Argentina is the world's third-largest exporter of soybeans after the United States and Brazil and is the world's largest exporter of soyoil and soymeal.
Spot March soybeans fell to a one-month low on Thursday then reversed course on Friday to close near the session high.
When trading resumed this week, the bellwether contract initially broke above resistance at its 50-day moving average of $14.38 per bushel and then penetrated key resistance at the 100- and 200-day moving averages of $14.56 and $14.57, respectively (all figures US$).
"China bought some old-crop beans and seeing them come back in, I think, was supportive as well," Smith added.
The U.S. Department of Agriculture said exporters sold 120,000 tonnes of U.S. soybeans to China for delivery during the current old-crop (2012-13) marketing year.
"Last week was the Lunar holiday and now we're seeing China come back in for beans. I think that and the fact rains weren't very good over the weekend in South America led it up," said Jason Roose of U.S. Commodities, Des Moines, Iowa.
"Also, even though there is a big harvest in Brazil they're not able to move soybeans out. Vessels are backed up due to their logistical and infrastructure problem," Roose said.
Roose also said there was concern about the potential for a Brazilian port strike that could cripple exports of soybeans from Brazil.
Brazilian dock workers, protesting a government port modernization drive they fear will cost them jobs, stood fast for a second day on Tuesday, refusing to let nonunion workers unload a Chinese ship at Santos Port.
The U.S. Department of Agriculture (USDA) has projected Brazil to be the world's largest exporter of soy, exporting 38.4 million tonnes this (2012-13) marketing year, compared with the U.S. estimated export total of 36.61 million.
Corn and wheat turned downward on improved crop weather prospects in the U.S., while wheat found extra pressure from a big export sale by India.
Chicago Board of Trade March soybeans were up 45-3/4 cents per bushel at $14.70-1/4, March corn was down 3-1/2 cents at $6.95-1/4 and March wheat was down 10 at $7.32-1/4.
Chicago March soymeal jumped 3.88 per cent to $425.30 a ton.
Wheat and corn farmers are banking on more rain and snow in late February so they can keep nursing depleted soil back to healthier levels of moisture amid the worst drought in the U.S. grain belt in more than 50 years.
Agricultural meteorologists said the precipitation expected in the next week to 10 days will provide significant relief for crop prospects in the U.S. Plains and Midwest.
John Dee, a meteorologist for Global Weather Monitoring, said, "This will really help add to soil moisture levels."
Wheat also was pressured by a large sale of 750,000 tonnes of wheat as Indian traders jumped in to take advantage of attractive global prices. The sale is seen as a precursor of overseas sales for the harvest that will begin in March.
-- Sam Nelson writes on the CBOT grain and soy futures markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.