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Soybeans rise on lower yield outlook

09/12/2012 @ 3:45pm

U.S. soybean futures jumped Wednesday, after the government cut its forecast for the U.S. crop's yield by more than analysts had expected, pointing to tighter supplies.

September soybean futures, thinly traded ahead of the contract's expiration Friday, settled up 44 1/4 cents, or 2.6%, to $17.40 3/4 a bushel at the Chicago Board of Trade. Most-active November soybeans rose 44 1/4 cents, or 2.6%, to $17.45 3/4 a bushel.

More on Monday's USDA reports & market reaction


The USDA now expects a national soybean yield this year of 35.3 bushels an acre, down from its August forecast of 36.1 bushels an acre. Analysts had expected a forecast of 35.5 bushels an acre.

The USDA estimated the overall soybean harvest will be 2.634 billion bushels, down 2% from its estimate last month. The agency's forecasts for both soybean yields and the total soybean harvest would be the lowest in nine years.

The USDA estimated domestic soybean inventories Aug. 31 were 130 million bushels, lower than the average analyst forecast of 137 million.

The USDA didn't change its forecast for domestic soybean inventories a year from now. The forecast of 115 million bushels would still be a nine-year low, though analysts had expected a reduction. In the USDA's forecasts, lower demand from processors and exporters made up for a smaller crop.

A small part of Wednesday's gains for soybeans may have come from dryness in parts of Brazil, raising concerns that early-season planting could be delayed, traders said.

"If it continues it could impact how many soybeans are available to be harvested very early" in January, said Anne Frick, senior oilseed analyst with Jefferies Bache in New York. "I don't think that it has much if any impact on potential South American yields."

In other markets, corn futures fell, as the USDA cut its yield forecast for the grain by less than expected. The USDA projected the worst national corn yield since 1995, at 122.8 bushels an acre, down from its August forecast of 123.4 bushels an acre. But analysts on average had expected a lower forecast of 120.6 bushels an acre.

Thinly traded September corn fell 11 1/4 cents, or 1.4%, to $7.71 a bushel. Most-active December corn fell 8 1/4 cents, or 1.1%, to $7.69 1/2 a bushel.

Wheat futures followed corn lower in the morning, but ended higher as some traders remain worried world wheat supplies could grow tighter than the USDA projected.

The USDA left unchanged its forecast of 698 million bushels for U.S. wheat inventories at the end of the 2012-13 marketing year. Analysts had expected a small increase.

Thinly traded CBOT September wheat futures rose seven cents, or 0.8%, to $8.67 a bushel. CBOT December wheat rose 6 1/4 cents, or 0.7%, to $8.90 a bushel. Kansas City Board of Trade December wheat rose 8 1/2 cents, or 0.9%, to $9.12 1/2 a bushel. MGEX December wheat rose 16 1/2 cents, or 1.8%, to $9.51 1/2 a bushel.

Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 12, 2012 15:38 ET (19:38 GMT)
DJ U.S. GRAIN AND SOY REVIEW: Soybeans Rise on Lower Yield Outlook->copyright

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