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Beans gain on exports

John Walter 04/26/2012 @ 3:21pm

U.S. soybean futures ended mixed Thursday, with futures representing the current marketing year supported by strong export demand and tightening global supplies.

The most active July soybean contract finished 4 1/4 cents higher, at $14.80 1/4 a bushel.

"Export demand is still there for U.S. products, reflective of higher than expected weekly export sales reported Thursday," said Terry Reilly, analyst with Citi in Chicago.

U.S. soybean export sales in the week ended April 19 totaled 1.409 million metric tons, according to U.S. Department of Agriculture. The sales beat trader expectations that ranged from 800,000 to 1.3 million metric tons.

The strong demand raises fear of tighter end-of year soybean inventories, with smaller Argentina crop forecasts expected to keep importers eyeing U.S. supplies at a time when demand is normally centered on Brazil and Argentina.

"Its currently cheaper to ship supplies from the U.S. to China than from Brazil to China," said Rich Nelson, director of research at advisory firm Allendale Inc. in McHenry, Ill.

"Our calculations estimate the net cost to ship soy to China at $16.77 a bushel, compared to $17.11 a bushel from Brazil," Nelson said.

Soybeans were also supported by lower estimates for Argentine production.

"It just seems to be reduction after reduction after reduction coming out of South America" for soybean and corn production, said David Durra, president of AgSpread Analytics. "Almost weekly there have been new reduced numbers coming out of South America, and people had factored in a disappointing crop, but I don't know if people had factored in almost weekly reductions," he added.

Meanwhile, new crop marketing year contracts representing crops that will be harvested in autumn stumbled Thursday. Less threatening weather forecasts from spring plantings coupled with outlooks for increased soybean acreage than what USDA projected in March helped pressure deferred month contracts.

New crop contracts are starting to have a dominant influence in the market, as the steady drum beat of favorable planting weather starts to gain traction, said Nelson.

A rally in the soybean-corn price ratio has led to expectations that some U.S. acres have likely been switched over to soybeans from corn.

The November soybean contract dropped 11 3/4 cents, or 0.9%, to $13.58 3/4.

Separately, U.S. corn futures closed mixed, with new crop futures succumbing to selling pressure from improved weather conditions for spring plantings and crop development.

"We have one of the largest plantings ever in history, one of the quickest planting paces in recent history, leaving people expecting new-crop corn to come online in August to September to help deal with some supply issues," Durra said.

CBOT July corn ended up 6 1/2 cents, at $6.07 1/2, and the December contract that represents crops to be harvested in the fall dropped 3 cents, to $5.35.

CBOT July wheat ended up 9 cents, at $6.35 1/2 per bushel, July KCBT wheat ended 8 cents higher, at $6.50, and July MGEX wheat ended down 13 cents, to $7.73.

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