U.S. grains: Soybeans climb on mounting supply worries

Chicago | Reuters –– U.S. soybean futures soared on Tuesday as concerns about tighter supplies fueled a recovery from losses last week, and wheat and corn futures also climbed.

“Soybeans continue to take the majority of their support from simple supply and demand,” said Karl Setzer, grain solutions team leader for MaxYield Cooperative. “It is not out of the question that the U.S. could deplete soybean reserves this year without severe price rationing.”

Stronger-than-expected domestic soybean crushing and export sales have helped tighten U.S. supplies.

The National Oilseed Processors Association on Monday said its U.S. members crushed 141.612 million bushels of soybeans in February, slightly above the consensus in a Reuters poll of 140.9 million.

For export demand, total U.S. soybean export commitments as of March 6 were 106 per cent of the projected target for the crop year that ends on Aug. 31, above the five-year average of 91 per cent, according to U.S. Department of Agriculture (USDA) data.

“Crush margins have improved recently, leading processors to bid more aggressively for cash beans,” said Joe Vaclavik, president of Standard Grain.

USDA , in a quarterly report due on March 31, will likely report that, despite a larger U.S. harvest, domestic soybean stocks at the beginning of the month were as tight as they were a year ago, said Jerry Gidel, chief feed grains analyst for Rice Dairy.

He estimated March 1 stocks at one billion bushels, compared to 999 million the previous year, due to strong demand.

“The need to ration second half U.S. bean demand to 913 million bushels appears to be very tough,” Gidel said.

May soybeans on the Chicago Board of Trade advanced 26-1/2 cents to $14.18-1/4 per bushel (all figures US$). July soybeans were up 20-1/2 cents at $13.95-3/4 a bushel.

The rally came after the May contract dropped 94-1/2 cents from a contract high on March 7 to a two-week low on March 12. Prices had jumped prior to a U.S. crop report on March 10 that reduced the outlook for soybean inventories.

Bull spreading in the market, or buying the nearby May contract and selling the July contract, was a sign of fresh buying by funds, Hannagan said.

“You’re seeing funds allocating money that they took out of the market after the crop report,” he said. “They decided, ‘I guess we’re still in the same running out of beans situation.'”

Egypt buys wheat

U.S. wheat futures jumped as Egypt, the world’s biggest importer of the grain, said it bought 175,000 tonnes of U.S., Russian and Romanian wheat in a tender.

Technical buying and crop concerns helped to lift prices, traders said.

In Kansas, the top U.S. hard red winter wheat state, 34 per cent of the crop was rated in good to excellent condition, down from 37 per cent a week earlier, according to USDA’s National Agricultural Statistics Service.

CBOT May wheat futures surged 17-1/2 cents to $6.92-1/2 a bushel. May corn gained 7-1/4 cents to $4.86-1/4 a bushel.

— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London, Colin Packham in Sydney and Alexander Winning in London.


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