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Beans close "in the teens"

02/27/2012 @ 9:36am

DES MOINES, Iowa (Agriculture.com)--Stretching to a five-month high on dropping soybean output estimates from Brazil, the CME Group soybean prices hit "the teens" Monday.

The May corn futures trade 2 1/4 cents higher at $6.46 1/2. The May soybean contract is trading 8 1/2 cents higher at $12.95 1/4. The May wheat futures are trading 5 cents higher at $6.46 1/4.  The May soymeal futures are trading $4.30 per short ton higher at $340.50. The May soyoil futures are trading $0.08 lower at $54.57. 

In the outside markets, the NYMEX crude oil is $0.73 per barrel lower, the dollar is higher and the Dow Jones Industrials are up 17 points.

Joe Bedore, FC Stone Inc.'s CME Group floor manager, says the lower crop estimates out of South America seemed to be powering the farm markets.

"I think everyone is looking at a lower production number for southern Brazil's soybean crop. I think China needs soybeans, at a time when Brazil is having problems. Some of the export business is shifting to the U.S.," Bedore says. "In addition, the U.S. farmer likes to plant corn, so that means tight soybean numbers could be ahead."

Jack Scoville, PRICE Futures Group vice-president, says Brazil had a tendency to offer soybeans for delivery before they have any chance of actually being able to deliver. "And this year, with the rains in the north creating soggy harvest conditions, that is especially true. There is always some switching of origin from Brazil to here, for a few weeks and it gets people all excited. U.S. beans are cheap enough in all markets to start to think demand will improve, and with Brazil slow to load that is what is happening with soybean prices," Scoville says

As the soybean market goes up, the corn market will be a reluctant follower, Bedore says.

Meanwhile, the market is starting to confirm the talk that investors are re-entering the commodities market, he says.

"We are seeing more buying on the close. That tells you that more investors are coming off of the sidelines," Bedore says.

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