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Soybeans extend rally Wednesday

02/20/2013 @ 3:52pm

U.S. soybean futures rose for the second straight session Wednesday, settling at their highest level in two weeks amid strong export demand for the oilseed.

Chicago Board of Trade soybeans for March delivery gained 12 1/2 cents, or 0.9%, to $14.82 3/4 a bushel.

Soybeans are bouncing back from last week's slide, bolstered by continued strength in demand from both foreign importers and domestic processors. The pace of export sales and domestic processing is raising concerns that already tight U.S. supplies will be further squeezed.

"Export sales and shipments of U.S. soybeans are running at an unsustainable pace," said Dave Marshall, grain marketing adviser for agricultural-advisory firm TCFG LLC in Nashville, Ill. "We can't keep this pace up and not run out of soybean inventories."

The U.S. government has estimated that domestic stockpiles on Aug. 31, the end of the current soybean marketing year, will be the lowest for that time of year since 2004.

The rally in soybeans began with a 3% jump in prices Tuesday, fueled by an unexpected export sales to China and worries that dry conditions will curb soybean production in Argentina, the world's third-largest producer.

Companies that rely on soybean supplies, such as food processors and livestock companies, are counting on Brazil, the second-largest producer after the U.S., and Argentina to relieve the strain of tight global supplies. The countries will harvest their crops in the next couple of months.

"South America was supposed to save the day, but it's still up in the air on what Argentina's production will be," said Bill Nelson, an analyst with Doane Advisory Services in St. Louis.



Some market watchers think lower Argentina production--coupled with logistical problems for Brazil exports--will push foreign buyers to the U.S. at a time when the U.S. need to slow demand.

Soybean traders are coming to grips with the possibility that supplies from Argentina and Brazil may not be available for buyers as quickly as market participants once had assumed.

U.S. corn and wheat futures also rose Wednesday, drawing support from soybeans, with wheat also buoyed by a fresh export sale to Egypt.

March wheat futures ended up 6 1/4 cents, or 0.9%, at $7.38 1/2 a bushel at the Chicago Board of Trade. Kansas City Board of Trade March wheat rose 8 1/4 cents, or 1.1%, to $7.77 1/4 a bushel. MGEX March wheat finished up 5 cents, or 0.6%, at $8.20 3/4 a bushel.

CBOT March corn ended up 5 1/4 cents, or 0.8%, at $7.00 1/2.


-Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
February 20, 2013 15:37 ET (20:37 GMT)
DJ UPDATE: Soybean Futures Extend Rally; Rise for Second Straight Day->copyright


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