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Soybeans surge on technicals, supplies

09/05/2013 @ 2:54pm

U.S. soybean futures reversed earlier losses to close the session higher on Thursday, buoyed by technical trading and concerns that rainfall in the forecast for the Corn Belt over the next week could reach crops too late in the growing season to replenish dry fields.

Chicago Board of Trade September soybeans added 25 1/4 cents, or 1.8%, to $14.23 a bushel. Most-active November soybeans picked up 15 cents, or 1.1%, to $13.67 1/2 a bushel.

Meanwhile, corn prices continued to fall. The most-active December contract slid 8 1/2 cents, or 1.8%, to $4.61 a bushel, a three-week low for that issue.

Soybean futures rose 13% through August as unfavorable weather accompanied the nation's soy crop through its most crucial stages of growth.

The combination of shifting weather forecasts for the final weeks of the growing season and uncertainty at how much stress the soybean crop endured--and how much yield potential was lost--in the largest-producing states of Iowa, Illinois, and Minnesota, has kept trading choppy over the past week.

Some analysts said traders also likely executed spreads between the two on Wednesday, when soybeans made the largest one-day drop in six weeks, betting that corn prices would have a more shallow dip relative to the oilseed.

Market participants began buying midday to reverse that spread, exiting some of those bearish bets on soybeans, which propped up the market relative to corn futures.

Profit-taking on those spreads "reflects a lack of conviction that the soybean rally is going to be really significant at this point," said Arlan Suderman, a senior market analyst with agricultural advisory firm Water Street Solutions. "Soybean futures are stuck trading in a range right now until we receive better clarity on supplies."

The National Weather Service expanded precipitation models Thursday to show heavier rainfall in Iowa, Minnesota and the Dakotas over the next five days. The central and northern Midwest are likely to receive between one-quarter to six-tenths of an inch of rain, with heavier showers forecast in the seven-day outlook.

While some suspect the rains could work to replenish a handful of growing regions in the coming weeks, others are concerned the precipitation is too little, too late.

Wheat futures followed the declines in corn, as the two grains are direct substitutes in animal feed. CBOT December wheat shed 6 cents, or 0.9%, to $6.40 1/4 a bushel, an all-time closing low for that contract. KCBT December wheat fell 8 3/4 cents, or 1.25%, to $6.89 1/4 a bushel. MGEX December wheat was off 11 1/4 cents, or 1.6%, at $7.10 3/4 a bushel.


Write to Kelsey Gee at kelsey.gee@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 05, 2013 15:39 ET (19:39 GMT)
DJ U.S. Soybean Futures Settle Higher on Technicals; Supply Caution->copyright


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