U.S. grains: Soy rallies on export hopes

(Keith Weller photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures soared to their highest in nearly two years on Thursday on hopes that export demand will rise amid concerns about the quality of the crop being harvested in Argentina.

Corn firmed to its highest since July 2015, supported by forecasts for a reduced harvest in Brazil, but closed well off its highs on a bout of profit taking. Wheat rose to a one-month peak, with technical strength overcoming concerns about plentiful global supplies.

Soymeal futures led the gains in the soy complex, rising five per cent on expectations that overseas buyers will start to turn to the U.S. to meet their needs due to weather problems in South America. Soybeans were up four per cent, their third day of gains in four sessions.

“Realistically, we have seen the numbers out of South America, with the governments there dialling back their production,” said Bill Gentry, a broker with Risk Management Commodities in Lafayette, Indiana. “I think things are tighter than they were. The market is basically dialling it (increased demand for U.S. supplies) in now.”

Rains this week in Argentina’s top agricultural province, which was previously unaffected by recent wet weather, may further damage the 2015-16 soybean harvest, the Buenos Aires Grain Exchange said Thursday.

Chicago Board of Trade July soybean futures closed up 44-1/2 cents at $11.44-1/4 a bushel (all figures US$). The most-active contract peaked at its highest since July 3, 2014.

CBOT July corn settled 1-1/2 cents higher at $4.15-1/4 a bushel after reaching $4.19-1/2 earlier in the session.

“There is a bullish trend as we are expecting strong demand for U.S. products, both soybeans and corn,” said Kaname Gokon at brokerage Okato Shoji in Tokyo. “Chinese pork prices are at record highs, so they will need more corn and soybeans to boost pork production.”

Government data released on Wednesday showed Chinese pork prices hit record levels this week, with farmers holding back pigs from slaughter to rebuild herds following widespread culling in 2014 when prices were low.

Brazil’s cereals exporters association Anec cut its estimate for 2016 corn exports to 23 million tonnes, down seven million tonnes from its April outlook.

CBOT July soft red winter wheat futures were up 11-3/4 cents at $4.85-1/2 a bushel, with gains accelerating as the contract broke through resistance at its 30-, 40-, 100- and 200-day moving averages.

Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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