Soybeans rally as weaker dollar may boost demand for US crop
Wednesday, 29 July 2009
NEW YORK, July 28 (Bloomberg): Soybean futures climbed in Chicago for the first time in three days on speculation the dollar's weakness will boost demand for US supplies. Wheat and corn also gained.
The dollar traded near the lowest level in seven weeks against the euro as equities extended a global rally, adding to evidence investors are shifting to higher-yielding assets. A weaker dollar makes US crops more attractive to overseas buyers holding other currencies.
"The dollar's drop lent support to soybeans," said Tomokazu Amano, research team chief at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. The soybean market was also supported by a widening of cash premiums against Chicago futures as US farmers slowed sales on lower prices, he said.
Soybeans for November delivery advanced 1.4 per cent to $9.1925 a bushel on the Chicago Board of Trade at 2:41 p.m. Singapore time, after gaining as much as 1.6 per cent earlier. The oilseed has dropped 6.2 per cent this year.
December-delivery corn added 1.2 per cent to $3.3775 a bushel, extending yesterday's 2 per cent rise on speculation the coldest July in almost five decades has slowed development of the US crop, increasing the risk of freeze damage, while hot weather in Europe threatens crops in their reproductive stage.
"Hot, dry weather through corn growing areas of the south and east Ukraine and south Russia has affected reproductive corn during the past week," DTN Meteorology LLC said in a report dated yesterday.
Corn shipments from Ukraine, the world's fourth-largest exporter, are forecast to drop 36 per cent to 3.5 million metric tons in the marketing year 2009-2010, according to US Department of Agriculture estimates.
The US government inspected 52.2 million bushels of corn for export in the week ended July 23, up 33 per cent from a week earlier, the USDA said in a report yesterday.
About 70 per cent of the US crop was in good or excellent condition as of July 26, down from 71 per cent a week earlier, the USDA said. Approximately 55 per cent of plants were beginning to create grain, down from the previous five-year average of 76 per cent.
An estimated 67 per cent of soybeans got the best ratings, up from 62 per cent at the same time last year, the USDA said.
"Old crop soybeans look vulnerable to downside after indications that exports are waning," said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. "A successful auction on Wednesday of stockpiled Chinese beans would put a further dent in demand for US beans."
China will auction 500,000 tons of soybeans from state stockpiles tomorrow, the country's National Grain & Oil Trade Center said on its Web site July 24. The government failed to find any buyers for about 500,000 tons offered for sale last week because prices were above the cost of imports.
"If no takers are found, the government is expected to try to subsidize sales next week" in order to clear out state-owned warehouses to prepare for the Chinese harvest in October, Charlie Sernatinger, a market analyst for Fortis Clearing Americas LLC in Chicago, said yesterday.
The dollar was at $1.4275 against the euro as of 2:23 p.m. in Singapore after touching $1.4298 yesterday, the weakest level since June 3. Wheat for September delivery gained 0.8 per cent to $5.2475 a bushel.
The dollar traded near the lowest level in seven weeks against the euro as equities extended a global rally, adding to evidence investors are shifting to higher-yielding assets. A weaker dollar makes US crops more attractive to overseas buyers holding other currencies.
"The dollar's drop lent support to soybeans," said Tomokazu Amano, research team chief at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. The soybean market was also supported by a widening of cash premiums against Chicago futures as US farmers slowed sales on lower prices, he said.
Soybeans for November delivery advanced 1.4 per cent to $9.1925 a bushel on the Chicago Board of Trade at 2:41 p.m. Singapore time, after gaining as much as 1.6 per cent earlier. The oilseed has dropped 6.2 per cent this year.
December-delivery corn added 1.2 per cent to $3.3775 a bushel, extending yesterday's 2 per cent rise on speculation the coldest July in almost five decades has slowed development of the US crop, increasing the risk of freeze damage, while hot weather in Europe threatens crops in their reproductive stage.
"Hot, dry weather through corn growing areas of the south and east Ukraine and south Russia has affected reproductive corn during the past week," DTN Meteorology LLC said in a report dated yesterday.
Corn shipments from Ukraine, the world's fourth-largest exporter, are forecast to drop 36 per cent to 3.5 million metric tons in the marketing year 2009-2010, according to US Department of Agriculture estimates.
The US government inspected 52.2 million bushels of corn for export in the week ended July 23, up 33 per cent from a week earlier, the USDA said in a report yesterday.
About 70 per cent of the US crop was in good or excellent condition as of July 26, down from 71 per cent a week earlier, the USDA said. Approximately 55 per cent of plants were beginning to create grain, down from the previous five-year average of 76 per cent.
An estimated 67 per cent of soybeans got the best ratings, up from 62 per cent at the same time last year, the USDA said.
"Old crop soybeans look vulnerable to downside after indications that exports are waning," said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. "A successful auction on Wednesday of stockpiled Chinese beans would put a further dent in demand for US beans."
China will auction 500,000 tons of soybeans from state stockpiles tomorrow, the country's National Grain & Oil Trade Center said on its Web site July 24. The government failed to find any buyers for about 500,000 tons offered for sale last week because prices were above the cost of imports.
"If no takers are found, the government is expected to try to subsidize sales next week" in order to clear out state-owned warehouses to prepare for the Chinese harvest in October, Charlie Sernatinger, a market analyst for Fortis Clearing Americas LLC in Chicago, said yesterday.
The dollar was at $1.4275 against the euro as of 2:23 p.m. in Singapore after touching $1.4298 yesterday, the weakest level since June 3. Wheat for September delivery gained 0.8 per cent to $5.2475 a bushel.