Chicago Board of Trade (CBOT) soybean futures rose to their highest level in nearly four months on Tuesday as holdups in getting recently harvested South American crops to market buoyed demand for U.S. supplies, traders said.
Corn and wheat futures also rose, with a weak dollar and strong equities market adding a bullish tone to the commodity sector.
Private exporters reported the sale of 675,000 tonnes of U.S. soybeans, including 330,000 tonnes of old-crop soybeans for delivery during this marketing year, the U.S. Agriculture Department said on Tuesday morning.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
The old-crop sales, which traders said were made to China, further thinned an already tight supply situation and illustrated the difficulty that South American shippers are having in delivering supplies to overseas buyers.
"You have seen about a 55-day delay getting the boats loaded up down in Brazil," said Chris Robinson, a senior trader at Top Third Ag Marketing. "They are cancelling those sales down there and they are coming up to the Pacific Northwest and they are paying up for old-crop soybeans."
Typically, soy supplies from Brazil and Argentina dominate the export market in March. But port delays have slowed the flow of beans leaving those countries, forcing importers to look to the United States to fill their needs despite higher prices.
CBOT May soybeans settled up 4-1/2 cents at $14.66-1/2 a bushel. The thinly traded March contract was up 6-1/4 cents at $14.96-1/2 a bushel after peaking at $15.11, the highest level for the spot contract since Nov. 8 (all figures US$).
"The logistical nightmare that is South America is overshadowing the needed early harvest and making the balance of a good South American crop and poor U.S. crop a moot point until it is cured," commodities brokerage INTL FCStone said in a note to clients.
CBOT May corn was up 5-3/4 cents at $7.09/bu., closing above the 50-day moving average for the first time since Feb. 5. CBOT May wheat was 3-1/2 cents higher at $7.06/bu.
Corn was strongest in old-crop months.
"I think we are just still a little bit concerned about the tightness in the supply," said Frank Cholly, a senior commodities broker at RJO Futures. "Traders are comfortable with this $7 level. We have little dips and it comes right back."
Gains in equities markets lent bullish support to risky assets such as grains and oilseeds. The Dow Jones industrial average surged to a record high on Tuesday.
CME Group on Tuesday said it would cut back its grain and oilseed trading hours on April 8. The exchange operator expanded the trading day in May 2012, but the move quickly came under sharp criticism, with many traders saying it reduced liquidity and made for a less efficient market.
Rising expectations for wheat
The gains in wheat were capped by the improved outlook for a large global crop this year.
In the U.S. Plains, warmer temperatures this week would melt much of the snow cover from a pair of big blizzards in late February, adding crop-friendly moisture to the drought-stricken hard red winter wheat region, said Andy Karst, meteorologist for World Weather Inc.
USDA’s National Agricultural Statistics Service said late on Monday that good-to-excellent ratings for wheat in Oklahoma and Kansas, the biggest hard red winter producer, rose following the storms.
Australia on Tuesday forecast wheat production in the 2013-14 marketing year would rise 13 per cent from the previous year, boosted by increased planting and higher yields from better growing conditions.
Wheat production there is expected to be 24.9 million tonnes, up from 22.077 million in the 2012/13 season, the Australian Bureau of Agriculture and Resource Economics and Sciences said.
— Mark Weinraub covers the grain futures markets in Chicago for Reuters. Additional reporting for Reuters by Sam Nelson in Chicago and Naveen Thukral in Singapore.
