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Soybeans rocket on S.A. woes

03/26/2012 @ 3:58pm

U.S. soybean futures rose to a fresh six-month high on Monday on concerns about a smaller South American crop and expectations for small growth in U.S. soy plantings.

Soybeans for May delivery ended up 13 3/4 cents, or 1.0%, at $13.79 1/2 a bushel at the Chicago Board of Trade, the highest closing price for the front-month contract since Sept. 13. May soymeal rose $4.90 to $377.90 a short ton, and May soyoil ended up 0.55 cents at 55.43 cents a pound.

U.S. soy futures have rallied this year as analysts have steadily reduced their expectations for soy output in Brazil and Argentina due to drought. Those concerns continued to boost futures Monday, as Brazilian commodities consultancy AgRural further cut its forecast for Brazil's 2011-12 soybean production.

AgRural now sees Brazil harvesting 66.68 million metric tons of soybeans, down 1.9% from the firm's previous forecast, released in February, and 11.5% less than in the 2010-11 crop. The U.S. Department of Agriculture this month estimated Brazil's crop at 68.5 million metric tons.

"There's still the feeling that the South American bean harvest is smaller than what we would've thought a couple of weeks ago, or even a week ago," said Hugh Whalen, an analyst at Mid-Co Commodities, a brokerage in Bloomington, Ill.

Soy futures also rose due to worries that corn plantings in the U.S. could be higher than previously expected. Warm weather is encouraging early planting, which favors corn and could mean more acres for the grain at the expense of soybeans, analysts said.

The USDA on Friday is due to issue updated national acreage and inventory forecasts for grains and soybeans. Analysts, on average, expect the USDA to forecast soybean plantings of 75.5 million acres this year, up slightly from 75 million acres last year, according to a Dow Jones poll.

Expectations for greater Chinese demand for U.S. soybeans is also driving the futures rally. Deng Ruihong, vice general manager of vegetable oil research at Chinese state grain trader Cofco Corp., said Monday in slides for presentation at a Beijing conference that China's soybean imports this marketing year may rise to 55 million-58 million metric tons, up from last year's 52.34 million tons.

Still, soybeans could face some pressure this week from profit-taking as market participants look to close off bets ahead of the USDA report Friday. Prices could also falter if the USDA forecasts greater U.S. soy plantings or more South American output than expected by analysts.

Separately, U.S. wheat futures closed higher, boosted by concerns about dry weather for Europe's wheat crop and the risk of frost damage to the U.S. winter wheat crop if temperatures suddenly cool. CBOT May wheat ended up 5 1/4 cents at $6.59 1/2 a bushel. May wheat rose 4 1/2 cents to $6.99 a bushel at the Kansas City Board of Trade, and May wheat climbed 4 3/4 cents at $8.22 a bushel at the MGEX in Minneapolis.

CBOT May corn ended down 8 3/4 cents, or 1.4%, at $6.37 3/4 a bushel, on expectations of a big U.S. crop this year.

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