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Soybeans rise on tight supplies

10/18/2012 @ 3:58pm

U.S. soybean futures jumped Thursday on a mix of technical buying, short-covering and concerns about tight supplies.

Chicago Board of Trade November soybeans settled up 36 1/4 cents or 2.4% at $15.45 1/2 a bushel.

A range of factors combined to boost soybeans, marking a recovery from the more than three-month lows reached on Monday, when November futures settled down 15.6% from their peak settlement of Sept. 4.

One factor that boosted futures Thursday was improved technical signals, including a settlement above $15 a bushel for November soybeans on Wednesday. Futures the previous day had traded at the same level during the session but gave up their gains to settle below the $15 level.

The rise in futures triggered short-covering Wednesday, with market participants buying futures to exit bets on lower prices. That activity picked up on Thursday, fueling further price increases, traders said.

Meanwhile, traders remain concerned about tight supplies of soybeans after the severe U.S. drought this summer widely damaged crops. Soybean demand from China, the world's top importer of the oilseeds, has also remained strong despite high prices.

"The technicals and fundamentals are coming together here," said Eric Wilkinson, a broker for Chicago-based Blue Group Trading. "It looks like it's seen a technical bottom here, and there's still a lot of demand out there."

Traders are concerned that world buyers will have to rely on tight U.S. soy supplies through the end of the year, since the next South American soybean harvest won't start until early next year.

"I think this market is starting to realize that there's going to be real slack in supply" heading into winter, Mr. Wilkinson said.

Soybeans pulled corn and wheat futures higher Thursday. The grains also benefited from supply concerns. The drought shrank the U.S. corn crop this year, and world wheat production faces a range of threats.

Strategie Grains on Thursday cut its estimate for the European Union's 2012-13 soft wheat production by 700,000 tons to 123 million tons. The influential analyst group cut its estimate for the region's 2012-13 corn harvest by 900,000 metric tons to 52.8 million tons.

December corn futures settled up 15 1/4 cents or 2.0% at $7.60 3/4 a bushel.

CBOT December wheat rose 12 1/4 cents or 1.4% to $8.68 1/2 a bushel. KCBT December wheat rose 10 3/4 cents or 1.2% to $9.04 3/4 a bushel. MGEX December wheat rose 4 1/2 cents or 0.5% to $9.44 a bushel.

-Michael Haddon contributed to this article.
Write to Owen Fletcher at owen.fletcher@dowjones.com
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(END) Dow Jones Newswires
October 18, 2012 15:34 ET (19:34 GMT)
DJ U.S. GRAIN AND SOY REVIEW: Soy Rises on Technicals, Tight Supply->copyright

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