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Demand keeps soybeans afloat

08/28/2012 @ 3:46pm

U.S. grain and soybean futures finished mixed Tuesday, with soybeans rising thanks to orders of U.S. soybeans by China and Taiwan.

The soybean market was able to separate from the selling pressures that plagued corn and wheat futures, because record prices haven't cooled demand for soybeans from end users such as food processors and exporters.

Chicago Board of Trade soybeans for September delivery rose 2 3/4 cents, or 0.2%, to $17.32 1/2 a bushel. November soybeans settled up 3 1/2 cents, or 0.2%, at $17.22 1/4 a bushel.

"The difference between grains and soybeans was beans saw some export demand and corn and wheat didn't," said John Kleist, an analyst with trading firm ebottrading.com.


Grains mixed in undecided, hesitant trade



China bought 110,000 metric tons of U.S. soybeans for delivery in the 2012-13 marketing year that starts Sept. 1, the U.S. Department of Agriculture said Tuesday.

Meanwhile, the Taichung branch of Taiwan's Breakfast Soybean Procurement Association Tuesday purchased three cargoes totaling 178,000 metric tons of U.S. and Brazilian soybeans for shipment in November, March and July, trading executives said.

It marked the second report in less than a week that importers in Taiwan are buying three cargoes together, and for shipments up to a year in advance.

"With the margin of error for U.S. production and world supplies so thin after a historic drought, world buyers are actively securing inventories that will cover [their] needs until South America harvests crops in the spring," said Jason Britt, president of brokerage Central States Commodities in Kansas City, Mo.

The world is facing a significant drop in soybean production following the large reductions forecast for this year's U.S. crop and after South American losses earlier in the year. U.S. farmers are grappling with a historic drought, while soybean production in Brazil and Argentina also was hampered by drought.

Soybean futures rallied to new contract-life highs recently, fueled by lower-than-expected production estimates from private forecasters.

Traders were less inclined to sell soybean futures after prices dropped Monday. The combination of declining crop conditions and solid demand presented buying opportunities for traders after Monday's slump.

"Every time the market sets back, it uncovers fresh export demand," a CBOT trader said.

Corn futures declined as traders reduced risk in the market, concerned about weakening demand from livestock companies and other corn buyers.

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