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Soybeans surge to 5-month high

02/24/2014 @ 8:37am

DES MOINES, Iowa (Agriculture.com)--The CME Group soybean market used inclement weather and managed money buying to rally Monday. 

The March corn futures contract closed 1 1/4 cents lower at $4.57. The May soybean futures contract finished 14 3/4 cents higher at $13.75. May wheat futures ended 11 1/2 cents higher at $6.17 per bushel. The May soymeal futures contract closed $8.50 per short ton higher at $448.70. The May soyoil futures settled $0.20 lower at $41.03.

In the outside markets, the ICE Brent crude oil is $0.63 per barrel higher, the dollar is higher and the Dow Jones Industrials are 152 points higher.

Jack Scoville, PRICE Futures Group vice-president, says the soybean rally is all about tight U.S. supplies.  

"I see no reason for the beans to rally based on South America, as the weather has improved and as exports are starting to flow.  I read about delays in getting the beans to ports with trucks lining up outside the ports again. But, that happens every year.  So, I think it is all tight supplies here and demand holding more or less here," Scoville says.

Corn and wheat are moving a touch lower, due to the moves in Ukraine that we tend to think will allow for exports to flow as the threat of a civil war or something is less, he says.   

"Chicago Wheat is firm, must be winterkill threats, as a lot of areas to the south lost snow cover last week.  Not hearing of demand, although export inspections were pretty good this week."

Dustin Johnson, EHedger LLC analyst, says this soybean rally has been technical in nature.  

"While fundamentally, we have heard that a lot of meal purchasers were uncovered for this rally and are having to raise bids.  Soybeans have also broken out of their recent highs in the March contract and is causing a lot of shorts to capitulate," Johnson says. 

Meanwhile the "managed money" continues to add to their net bean long, Johnson says. 

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