Soybeans Rally to Three-Month High on Lower Output in Argentina

By Jae Hur

April 16 (Bloomberg) -- Soybeans climbed to a three-month high on speculation that declining production in Argentina may boost demand for supplies from the U.S., the world’s largest grower and exporter. Corn and wheat also gained.

The Buenos Aires Cereals Exchange lowered its 2009 soybean production forecast by 6.1 percent to 37 million metric tons, as the harvest may be the lowest in four years because of drought and pests, the bourse said yesterday. Farmers in Argentina, the world’s third-largest soybean grower, are limiting sales in a yearlong dispute with the government over an export tax.

“Among the grains and oilseed complex, soybeans are very bullish following strong demand from China, the forecast for a production cut in Argentina and lower inventories in the U.S.,” Tomokazu Amano, research team chief at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo, said today.

Soybeans for May delivery added as much as 1.3 percent to $10.48 a bushel, the highest since Jan. 12, in electronic trading on the Chicago Board of Trade and were at $10.4670 at 2:48 p.m. Singapore time. The price has gained 21 percent since March 11, when the U.S. Department of Agriculture projected global inventories would drop to a five-year low by Sept. 30.

The USDA on April 9 cut its month-old forecast for global production this year by 2 percent to 218.8 million metric tons.

U.S. export sales have risen 6.7 percent since Sept. 1 from a year earlier, with China buying 57 percent of the total. About 1.23 million tons of soybeans already purchased by China, about 32 percent of the total of outstanding sales to all destinations, have yet to be shipped, USDA data show.

Aggregated soybean open interest, or the total number of futures outstanding, totaled 358,410 contracts on April 14, up 4.2 percent from the day before. It was the highest level since Oct. 21, 2008, when open interest reached 360,169 contracts.

U.S. Corn

Corn for May delivery rose as much as 1.3 percent to $3.895 a bushel and was trading at $3.88 at 2:57 p.m. Singapore time.

The grain fell 2.5 percent yesterday, the biggest drop since March 11, as warm, dry weather in the U.S. Midwest helped make fields more accessible for planting, after rain left some soil too muddy for farm machinery. About 2 percent of the U.S. crop was planted as of April 12, compared with an average of 6 percent in the last five years, the USDA said.

The corn harvest in Argentina is 15 percent lower than last year and will likely result in a total collection of 13.5 million tons, the Cereals Exchange said.

Wheat for May delivery in Chicago added as much as 1.3 percent to $5.22 a bushel and last traded at $5.1925. The grain lost 1.3 percent yesterday on increased competition from Russia and Ukraine’s Black Sea ports.

Ukraine will be the fifth-largest shipper of wheat in the marketing year that began June 1, behind the U.S., Canada, Russia and Australia, according to the USDA. Ukraine yesterday said its grain stockpiles as of April 1 were 36 percent larger than a year earlier. The total inventory of 13.8 million tons included 6.8 million tons of wheat, the Kiev, Ukraine-based state statistics committee said.

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