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Demand hoists soybeans to 3-week highs

04/17/2013 @ 2:20pm

Nearby U.S. soybean futures rose to a nearly three-week high Wednesday on concerns about tight near-term supplies.

But deferred soybean futures fell slightly as traders worried U.S. farmers might plant more soybeans than previously expected, boosting the size of this fall's harvest.

Chicago Board of Trade May soybeans settled up 10 3/4 cents, or 0.8%, at $14.22 1/4 a bushel, the highest settlement since May 27. November soybeans fell 1/2 cent, or 0.04%, to $12.18 a bushel.

The tightness of currently available soybean stockpiles is reflected in near-record cash basis levels--the gap between cash prices for physical soybeans and futures--for this time of year.




Some analysts believe export demand for U.S. soybeans could increase, eating further into tight supplies. Hamburg-based oilseeds analysts Oil World on Tuesday said logistical problems in South America, a major soybean-exporting region, may force China to buy more U.S. soybeans in coming weeks.

Demand from domestic soybean processors also remains strong, analysts said.

Cash bids for spot soybeans on Wednesday morning were higher in parts of Illinois and Iowa. Soybean buyers in Quincy, Ill., were paying 59 cents above the price of May soybean futures, a premium 3 cents greater than the day before.

Basis levels are "extremely strong" in much of Iowa, ranging from around 50 cents to more than 70 cents above the price of July futures, said Doug Houghton, an analyst at Brock Associates, a commodity advisory firm in Milwaukee. "I can't remember it being any stronger," he said.

Deferred soybean prices eased because traders believe current cold, wet weather conditions in the Midwest could lead some farmers planning to plant corn to switch to soybeans instead. Late corn planting reduces yield expectations.

Heavy rainfall in states including Iowa and Illinois this week is likely to further delay corn planting.

Corn futures were mixed, with nearby futures down after government data showed weekly U.S. ethanol production slowed. Production slid 2.5% to 832,000 barrels a day in the week through Friday, falling after a surge the prior week, data from the U.S. Energy Information Administration showed.

But deferred corn futures rose on the expectations that planting delays may lead some farmers to switch away from planting corn.

May corn fell 2 3/4 cents, or 0.4%, to $6.60 1/2 a bushel. December corn rose 6 1/2 cents, or 1.2%, to $5.47 1/4 a bushel.

Wheat futures were steady, as traders weighed concerns about freeze damage to crops in the Plains against rain benefiting crops there and expectations for ample world wheat supplies this year.

CBOT May wheat rose 1/4 cent, or 0.04%, to $7.03 3/4 a bushel. KCBT May wheat rose 1/4 cent, or 0.03%, to $7.42 a bushel. MGEX May wheat fell 1 1/2 cents, or 0.2%, to $8.08 1/4 a bushel.


--Andrew Johnson Jr. contributed to this article.
Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
April 17, 2013 15:06 ET (19:06 GMT)
DJ U.S. Soybeans Settle Higher on Tight Current Supplies, Strong Demand->copyright


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