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Soybeans surge on supply worries

05/17/2013 @ 2:55pm

U.S. soybean futures settled higher Friday, with the spot July contract setting a fresh nine-week high on worries about tight near-term supplies.

Chicago Board of Trade soybeans for July delivery, the most actively traded contract, finished up 21 cents, or 1.5%, at $14.48 1/2 a bushel, gaining for the second straight day. The November soybean contract settled up 10 3/4 cents, or 0.9%, at $12.28 1/4.

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Futures contracts for near-term delivery led the advances, a reflection of just how difficult it is for domestic processors to source soybeans.

The tightness of available soybean stockpiles is reflected in near-record cash basis levels--the gap between cash prices for physical soybeans and futures--for this time of year.

Traders continue to buy contracts for near-term delivery and sell deferred contracts, a strategy known as spreading, said Mike Zuzolo, president of Global Commodity Analytics and Consulting in Lafayette, Ind.

New-crop futures--those with delivery dates such as November 2013--continue to trade at significant discounts to nearby contracts amid expectations for a big U.S. soybean crop this year.

"For once, what makes sense is actually working," said Jason Britt, president of brokerage Central States Commodities in Kansas City, Mo. "I think a lot of people are on that spread, but it's working. And it's working for a good reason."

But "new-crop" futures also climbed Friday, drawing support from uncertainty about weather and its impact on U.S. soybean plantings. Traders' worries about farmers shifting corn acres to soybeans due to weather delays have eased, as farmers are planting crops virtually around the clock to take advantage of a planting window this week before weekend storms return to the Midwest.

Corn futures ended mixed, with traders buying nearby contracts in the face of tight domestic stockpiles of the grain.

"Cash markets for corn are tight, and there is talk that some commercial end users could be turning to futures for July delivery to book summer supplies," said Mike Zuzolo, president of Global Commodity Analytics.

"New-crop" corn contracts dipped on expectations U.S. farmers could harvest a record crop this year, with the U.S. Department of Agriculture projecting ending stocks for the 2013-14 marketing year to balloon to more than two billion bushels.

CBOT corn for July delivery, the most actively traded contract, finished up 11 1/4 cents, or 1.8%, at $6.52 3/4 a bushel. The December contract settled down 4 1/2 cents, or 0.9%, to $5.19 1/2.

U.S. wheat futures settled lower Friday, falling for the third consecutive day amid selling based on technical factors and expectations for ample global wheat supplies this year.

July wheat futures ended down 4 1/2 cents, or 0.7%, at $6.83 1/4 a bushel at the Chicago Board of Trade. Kansas City Board of Trade July wheat dropped 6 1/4 cents, or 0.8%, to $7.37 1/4 a bushel. MGEX July wheat finished down 1/4 cents, or 0.03%, at $8.03 3/4 a bushel.


Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
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(END) Dow Jones Newswires
May 17, 2013 15:09 ET (19:09 GMT)
DJ UPDATE: Soybeans Rally to Fresh Highs Amid Supply Concerns->copyright


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