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Weather sinks corn, demand surges soybeans

05/16/2013 @ 2:56pm

U.S. soybean futures settled higher Thursday, with the spot July contract hitting a seven-week high on concerns about tight near-term supplies.

Chicago Board of Trade soybeans for July delivery, the most actively traded contract, finished up 14 3/4 cents, or 1%, at $14.27 1/2 a bushel. The November soybean contract settled up 7 3/4 cents, or 0.6%, to $12.17 1/2.

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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.

"This is the tail end of a spring 'old crop' rally," said Anne Frick, senior oilseeds analyst with Jefferies Bache in New York. The term "old crop" refers to soybeans harvested last fall.

Supplies are so tight that traders wonder if the July contract will match the May contract's highs as stockpiles shrink further, Ms. Frick said.

Futures contracts for near-term delivery led advances, a reflection of just how difficult it is for domestic processors to source soybeans after droughts last year in the U.S. and South America curtailed production of the oilseed.

The market is trying to tell soybean users to not buy expensive old-crop inventories, but instead buy cheaper "new crop" supplies that will be harvested this autumn, Ms. Frick said. The market is essentially trying to ration supplies, she added.

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

However, new-crop futures also climbed Thursday, drawing support from uncertainty about weather and its impact on this year's soybean plantings. Traders' worries about farmers shifting corn acres to soybeans due to weather delays are easing, as farmers are reportedly planting crops around the clock to take advantage of a planting window this week before weekend storms return to the Midwest.

Corn futures ended lower, pressured by expectations that this week's warm, dry weather in much of the Midwest is allowing farmers to make up for a slow start to the planting season. That eases concerns about a late-planted crop.

Assuming favorable weather, U.S. farmers are expected to harvest a record corn crop this year, with the U.S. Department of Agriculture projecting ending stocks for the 2013-14 marketing year to expand to more than two billion bushels.

CBOT corn for July delivery, the most actively traded contract, finished down 9 1/4 cents, or 1.4%, at $6.41 1/2 a bushel. The December contract settled down 7 3/4 cents, or 1.5%, to $5.24.

U.S. wheat futures settled mostly lower, declining for the second consecutive day amid technical selling and easing concerns about this year's U.S. production.

July wheat futures ended down 6 cents, or 0.9%, at $6.87 3/4 a bushel at the Chicago Board of Trade. Kansas City Board of Trade July wheat dropped 8 1/4 cents, or 1.1%, to $7.43 1/2 a bushel. MGEX July wheat finished up 1/4 cent, or 0.03%, at $8.04 a bushel.


Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
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(END) Dow Jones Newswires
May 16, 2013 15:20 ET (19:20 GMT)
DJ UPDATE: U.S. Soybean Futures Rally on Supply Concerns->copyright


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