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Soybeans climb on supply concerns

04/25/2013 @ 10:10am

U.S. soybean futures are trading higher Thursday, as the market recoups some of Wednesday's steep losses amid concerns about tight near-term supplies.

Chicago Board of Trade soybeans for May delivery recently were up 4 1/2 cents, or 0.3%, at $14.08 1/2 a bushel. November soybeans were up 6 1/4 cents, or 0.5%, to $12.

Soybean gains are fueled by tight supplies, with the "front end" of the market, or contracts for near-term delivery, supported by firm prices for physical supplies, as domestic processors and exporters compete for limited remaining stockpiles from last year's harvest.

"We are seeing a modest relief rally after Wednesday's sharp declines," said Sterling Smith, futures specialist with Citigroup Global Markets Inc. in Chicago.

Market participants realize near-term supplies are tight, and farmers are reluctant to deliver any stored grain as they focus their attention on planting crops, Mr. Smith said.

On Wednesday, futures fell sharply, pressured by speculative traders taking some profits in spot-month May futures as first notice day approached for the contract.

Market watchers said traders that bet on nearby contracts rising and "new crop" contracts declining have done extremely well and took some profits. New-crop contracts represent delivery dates following this fall's U.S. harvest.

Near-record cash-basis levels--the gap between cash prices for physical soybeans and futures--for this time of year illustrate the tightness of available soybean stockpiles.

Meanwhile, the U.S. Department of Agriculture reported net weekly export sales of 422,200 metric tons, which included net sales cancellations of 206,300 metric tons for the current marketing year that ends Aug. 31. Cancellations by China totaled 281,500 metric tons. Total sales fell below analysts' expectations of between 600,000 and one million metric tons.

The old-crop sales were disappointing, and could signal either that China, the world's leading importer of soybeans, may be turning to South America for supplies, or that its recent bird-flu outbreak may be slowing demand for its poultry industry, Mr. Smith said.

The USDA reported weekly sales of soymeal reached 218,600 metric tons. The sales were within estimates that ranged from 100,000 to 250,000 metric tons.

Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com.
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(END) Dow Jones Newswires
April 25, 2013 10:10 ET (14:10 GMT)
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