U.S. grains: Soybeans set five-week high on predicted drop in plantings

(Lisa Guenther photo)

Chicago | Reuters — U.S. soybean futures jumped to a five-week high on Thursday after the U.S. Agriculture Department projected farmers will plant fewer acres than traders expected in response to falling prices.

Corn futures also advanced, while wheat finished flat to lower.

USDA, in data released at its annual Agricultural Outlook conference, projected 2015-16 soybean plantings at 83.5 million acres, down slightly from 83.7 million in 2014-15.

Traders were widely expecting farmers to increase soybean plantings in an attempt to maximize earnings potential in the face of a weak corn market, and some disagreed with USDA.

“The economics still favour beans,” said Terry Reilly, senior commodity analyst for Futures International in Chicago. “We think USDA is still too low on their beans and high on their corn.”

Chicago Board of Trade (CBOT) March soybeans closed up 1.2 per cent at $10.07-1/4 a bushel, rebounding after falling 1.2 per cent on Wednesday, and touched a session high of $10.17 (all figures US$). That was the highest price for a front-month contract since Jan. 15.

The surprising decline in estimated soybean plantings is “relatively bullish” for prices, JP Morgan analyst Ann Duignan said. The market has been under pressure for weeks from “a constant news flow of oversupply across major producing regions,” she added.

USDA projected U.S. corn plantings at 89 million acres, down from 90.6 million in 2014-15, and all-wheat plantings at 55.5 million acres, down from 56.8 million.

The estimates are not set in stone because farmers can adjust their plans based on changes in weather and prices. However, “in a market that is starved for fresh news, they are getting a reaction,” said Karl Setzer, risk management team leader for MaxYield Cooperative in Iowa.

CBOT March corn rose 1.6 per cent to $3.89-3/4 a bushel. March wheat futures was unchanged at $5.27-3/4 after falling more than one per cent on Wednesday.

Wheat prices pared earlier gains after Egypt, the world’s top wheat importer, said it bought 240,000 tonnes of French and Romanian wheat in a tender and none from the U.S.

U.S. wheat prices are considered too high to be competitive on the global market, and Egypt on Wednesday canceled a tender seeking offers only from the U.S.

Egypt has taken steps to adjust quality rules for wheat imports that are expected to allow French grain to remain in the running for future deals.

— 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 Michael Hogan in Hamburg.

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