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Soy, grains rise on supply worries

10/17/2012 @ 3:44pm

U.S. grain and soybean futures rose Wednesday, boosted by a mix of technical buying and worries about tight supplies.

Chicago Board of Trade November soybeans settled up 15 1/2 cents, or 1.0%, at $15.09 1/4 a bushel. December corn futures settled up 7 1/4 cents, or 1.0%, at $7.45 1/2 a bushel.

CBOT December wheat settled up 8 1/2 cents, or 1.0%, at $8.56 1/4 a bushel. KCBT December wheat settled up 11 1/4 cents, or 1.3%, at $8.94 a bushel. MGEX December wheat settled up 15 cents, or 1.6%, at $9.39 1/2 a bushel.

Corn, wheat and soybean futures rose in choppy, low-volume trading on Wednesday, led for most of the day by soybeans.

Traders are unsure how big the U.S. corn and soybean crops will ultimately be, as they wait for farmers to finish harvesting and the U.S. government to give final production estimates. Some traders say higher prices are still needed to curb demand after the severe U.S. drought widely damaged crops this year, reducing available supplies.

Traders are particularly concerned about strong demand for soybeans, including from China.

Traders are also monitoring threats to world production of wheat, ranging from dryness in Australia and the U.S. Plains to excessive rain in Argentina.

Moderately favorable outside markets boosted the grain markets Wednesday, with a weaker dollar raising hopes for more export demand for U.S. crops.

But grain and soy futures have trended downward in recent weeks on negative technical signals and selling pressure from speculative funds, which are gradually their reducing historically large net positions betting on higher prices for corn, soybeans and wheat.

Soybeans could still go lower, potentially reaching around $14 a bushel, said Anne Frick, senior oilseed analyst with Jefferies Bache in New York. "I sort of suspect we'll put our lows in sometime over the next week or two," she said.

Despite concerns about strong demand and tight supplies, rallies are being limited by the potential for the U.S. soy crop to be bigger than expected, and by the large bullish positions by speculative funds, Ms. Frick said.

"If funds are already long," she said, "where is the new buying going to come from?"

-Write to Owen Fletcher at owen.fletcher@dowjones.com
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(END) Dow Jones Newswires
October 17, 2012 15:40 ET (19:40 GMT)
DJ U.S. GRAIN AND SOY REVIEW: Futures Rise in Quiet Session->copyright

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