Soybeans Gain on Concern Hot Midwest Weather May Reduce Yields

By Jae Hur

July 17 (Bloomberg) -- Soybeans climbed for a second day on speculation that hot, dry weather will reduce yields after record Midwest rains last month stunted root development, leaving U.S. crops vulnerable to heat stress. Corn also gained.

There is a forecast for above normal temperature and below normal precipitation in parts of the U.S. Midwest next week, Kenji Kobayashi, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone. Soybeans gained 2.1 percent yesterday, the most since July 1.

``This has pushed soybeans higher, stoking concern over this year's crop yields,'' Kobayashi said. The U.S. is the world's biggest producer and exporter of corn and soybeans.

Soybeans for November delivery rose as much as 13 cents, or 0.8 percent, to $15.61 a bushel in after-hours trading on the Chicago Board of Trade and stood at $15.5575 as of 10:52 a.m. Singapore time. The most-active futures have risen 87 percent in the past year, reaching a record $16.3675 on July 3.


Soybean stockpiles will drop 78 percent to 3.4 million tons by Aug. 31 from a year earlier, after farmers planted less and global demand for feed and vegetable oil jumped, the U.S. Department of Agriculture said July 11. Growers had 226.6 million bushels (6.2 million metric tons) in bins on June 1, down from 500 million a year earlier, agency data show.

Soybean yields are projected to fall to 41.6 bushels an acre from 42.1 bushels estimated in June, the USDA said.

Ethanol Demand

Corn for December delivery was down 0.5 cent at $6.765 a bushel at 10:54 a.m. Singapore time after gaining 1.6 percent yesterday. Futures have doubled in the past year, reaching a record $7.9925 on June 27, on rising demand for corn to feed livestock and to produce grain-based ethanol.

Corn prices were under pressure after an Energy Department report showed an unexpected increase in U.S. supplies of gasoline and after crude oil dropped 7.3 percent in the past two days, the biggest two-day decline since January 2007, said Kazuhiko Saito, strategist at Interes Capital Management Co. in Tokyo.

``The decline in gasoline stockpiles prompted concern that demand for ethanol may fall,'' Saito said.

Gasoline stockpiles rose 2.47 million barrels in the week ended July 11 to 214.2 million barrels, 5.4 percent higher than a year earlier, the report showed yesterday. Demand for the motor fuel was down 3.8 percent from the same period a year earlier, the department said. Ethanol is blended with gasoline to augment supplies and meet federal environmental mandates.

Wheat for September delivery fell 2.75 cents, or 0.3 percent, to $8.3125 a bushel at 10:42 a.m. Singapore time after gaining 2.8 percent yesterday on speculation that the dollar's slump will spur demand for U.S. exports. Prices have fallen 38 percent from a record $13.495 set on Feb. 27 as higher prices spurred farmers to boost planting.

In the export market, Iraq said yesterday it is seeking to buy 50,000 tons of wheat this month after purchasing 102,000 tons of U.S. and Canadian wheat for immediate delivery. Japan plans to buy 76,000 tons of milling wheat at a tender today.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net