Soybeans in Chicago Rise to Nine-Month High on Weather Concerns

By Luzi Ann Javier

June 5 (Bloomberg) -- Soybean futures rose to a nine-month high in Chicago, extending yesterday’s gains, on concern adverse weather will delay planting in the U.S., curbing yields in the world’s largest grower and exporter.

Severe storms and flash flooding are forecast for the plains, AccuWeather.com said in a report yesterday. There will be severe weather in Nebraska “over the next few days” and “parts of Iowa, Kansas, Missouri and northeastern Colorado will occasionally be at risk,” the report said. Iowa is the biggest soybean and corn producing state in the U.S. Soybeans closed 4.1 percent higher yesterday and corn rose 3.7 percent.

“A lot of this has to do with weather concerns and I think this is driving the whole complex a lot higher,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said by phone today, referring to oilseeds and grains.

July-delivery soybeans rallied as much as 0.5 percent to $12.365 a bushel, the highest since Sept. 4. The most-active contract traded at $12.3575 at 9:22 a.m. Singapore time.

Global production of soybeans is forecast to drop 3.6 percent to 211.9 million metric tons in the 2008-2009 marketing year as drought curbs output in South America, the U.N.’s Food and Agriculture Organization said in a report yesterday.

“Prices of oilseeds and products should remain firm and possibly strengthen further during the remainder of the current season,” the FAO report said. “Market tightness, and thus firmness in prices, could also spread into next season,” it said, citing the “very low level of carry-in stocks.”

Oilseed Production

Total oilseed output is estimated to rise 0.7 percent to 405.9 million tons in 2008-2009, from a year earlier, it said.

July-delivery corn was little changed at $4.4825 a bushel at 9:54 a.m. Singapore time. Wheat for July delivery in Chicago traded little changed at $6.3475 a bushel after ending 2.9 percent higher yesterday.

Prices of wheat and corn are likely to increase as wet weather makes fields too muddy for farm machinery, delaying planting and raising the risk of lower yields, Commodity Broking’s Barratt said.

“With wheat, it’s going to be pretty tough going, in terms of putting in the next crop,” Barratt said. “There’s still quite significant tightness in the corn market” that will help drive prices higher, he said.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net