Soybeans Head for Third Weekly Gain as Demand Cuts U.S. Supply

By Jae Hur

May 15 (Bloomberg) -- Soybeans climbed, heading for a third weekly gain, on speculation that increased global demand may further reduce inventories in the U.S., the world’s biggest grower and exporter of the crop.

Soybean-export sales in the four weeks ended May 7 were more than double the year-earlier period, the U.S. Department of Agriculture said yesterday. Sales of soybean meal, an animal feed, jumped 92 percent last week, it said. The oilseed has advanced 3.8 percent this week in Chicago.

“The rally in beans is providing spillover strength to both wheat and corn prices,” said Toby Hassall, an analyst at Commodity Warrants Australia Pty in Sydney. “The price mechanism is rationing dwindling supplies of beans to hungry importers.”

Soybeans for July delivery gained 0.2 percent to $11.4975 a bushel in electronic trading on the Chicago Board of Trade at 10:07 a.m. in Seoul. The price yesterday touched $11.48, the highest since Sept. 29.

Inventories of soybeans on Aug. 31, before this year’s harvest, will drop to 130 million bushels from 205 million bushels a year earlier, the USDA said May 12. Corn reserves on Aug. 31, 2010, will fall to 1.145 billion bushels, down 28 percent from a revised 1.6 billion projected for this year.

Corn for July delivery declined 0.2 percent to $4.275 a bushel. The grain is still on track to rise for a third week, gaining 1.7 percent before today. The price reached $4.34 on May 13, the highest since Oct. 9.

“A window of more favourable weather in the Midwest next week would take some of the yield-premium out of corn prices,” Hassall said.

July-delivery wheat was little changed at $5.9325 a bushel. The price has dropped 2.9 percent this year on increased global production and declining demand for U.S. grain.

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