U.S. grains: Soybeans retreat on profit-taking

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures fell on Thursday on profit-taking after rising to their highest in 20 months as soymeal pared gains, but analysts cautioned that soymeal’s rally might not be over.

Wheat futures rose three per cent and corn firmed, notching a 10-month top in early moves.

At the Chicago Board of Trade, July soybeans settled down 5-3/4 cents at $10.79-3/4 per bushel after reaching $10.98, the highest spot price since September 2014 (all figures US$).

CBOT July wheat ended up 15-1/4 cents at $4.81-1/4 a bushel and July corn climbed 3-1/2 cents to settle at $4.08-1/4 a bushel.

Soybeans declined after the spot July contract fell short of the $11-per-bushel mark and as weekly export sales data from the U.S. Department of Agriculture failed to impress traders.

“We are definitely seeing a lot of profit-taking. That started in soybean meal and has spilled over into the soybean market,” said Brian Hoops, president of brokerage and advisory service Midwest Market Solutions.

Spot soymeal futures pared gains after reaching their highest since September 2014 on the prospects of reduced soymeal supplies from Argentina, the world’s top exporter.

Argentina’s soy-producing regions were drenched by heavy rains in April, raising questions about the size and quality of the crop just ahead of harvest.

While spot July soymeal futures settled below their session highs and even traded lower at times, chart patterns suggested the rally was not over.

“Once we get some sort of a technical reversal, that would be the first indication that a top has been formed. We would be looking for a day where (July soymeal) makes new highs and then closes below the previous day’s lows, or some sort of a reversal like that. And we have not seen anything like that,” Hoops said.

Wheat rose, with the CBOT July contract posting a one-week high on short-covering and expectations that U.S. livestock producers will substitute low-priced wheat for corn in feed rations this summer.

“We know we are starting to replace corn in feeding rations with wheat,” said Roy Huckabay with Linn Associates, a Chicago brokerage.

Funds hold a massive net short position in CBOT wheat, Huckabay noted, a factor that leaves the market vulnerable to short-covering rallies.

Corn closed firm but trade was choppy after the front contract climbed to a 10-month top, prompting producer selling.

“We are seeing a lot of hedge pressure,” Hoops said.

Julie Ingwersen 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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