U.S. grains: Soybeans surge on soymeal demand

(Lisa Guenther photo)

Chicago | Reuters — U.S. soybean futures surged nearly four per cent on Tuesday on strength in the cash market as slow country movement and heavy export commitments left soy processors scrambling for supplies, despite a record U.S. harvest.

Corn and wheat also rose but trailed the gains in the soy complex.

At the Chicago Board of Trade, January soybeans settled up 38-1/4 cents at $10.64 a bushel, after reaching $10.73-1/2, the contract’s highest level since Aug. 15 (all figures US$).

December corn ended up 4-1/2 cents at $3.73-3/4 a bushel and December wheat finished up 8 cents at $5.25-1/4 a bushel.

Technical buying in soybeans accelerated as the January contract surpassed its Oct. 30 high of $10.59-1/4, and December soymeal pushed through psychological resistance at $400, reaching $404.70 before settling at $400.60.

“Demand, demand, demand — that’s it in a nutshell,” Tom Fritz, a partner with EFG Group in Chicago, said of the soy complex. “(Cash) basis levels continue to be strong. There are still problems with meal, as far as transportation logistics are concerned,” he added.

Concerns about a cold spell descending in the U.S. Farm Belt added support for soymeal, which is used in animal feed.

“With the first blast of cold air, you start to up the meal and feed consumption,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. “We are still in this difficult transition from razor-tight old-crop supplies to excessive new crop supplies,” Roose added.

Corn followed soybeans higher but gains were limited by soybean/corn spreading and lacklustre export demand.

“I thought corn would have more of a bounce with soybeans moving like they are, and the fact the we still have over two billion bushels of corn out in the fields, and the harvest is going to be hampered by snow,” said Brian Hoops, president of brokerage Midwest Market Solutions.

The focus in wheat was on spreads, with front-month CBOT December wheat gaining against back months on expectations of a drop in CBOT wheat storage rates next month.

At the Minneapolis Grain Exchange, December spring wheat finished up 12-1/2 cents at $5.66-3/4 on carryover buying one day after the U.S. Department of Agriculture cut its estimates of U.S. 2014-15 spring wheat production and ending stocks.

— Julie Ingwersen is a Reuters correspondent covering crop commodity futures from Chicago. Additional reporting for Reuters by Nigel Hunt in London, Naveen Thukral in Singapore and Michael Hogan in Hamburg.

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