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Soybeans rise on tight supply, exports

02/27/2013 @ 4:30pm

U.S. soybean futures rose Wednesday, boosted by concerns about tight supplies and a fresh sign of strong export demand.

Chicago Board of Trade March soybeans settled up 9 3/4 cents or 0.7% at $14.57 1/2 a bushel.

Thursday will be first-notice day for March futures, which means it is the first day on which notices of intention to deliver actual commodities against futures-market positions can be received.

Analysts expect deliveries against CBOT March soybean contracts on first-notice day within a range of zero to 100 lots, in a reflection of tight supplies of the oilseed.

Futures rose on the expectations for low deliveries. If delivery intentions are in line with expectations, it will be seen as confirmation that suppliers think soybeans are more valuable than reflected by current prices.

Soybeans also benefited from the latest sign of robust export demand. On Wednesday, the U.S. Department of Agriculture said private exporters reported selling 120,000 metric tons of soybeans for delivery to unknown buyers in the 2012-13 marketing year, which ends Aug. 31, and another 120,000 metric tons to China for the next marketing year.

U.S. soybean export sales for delivery this marketing year are likely to drop off soon, similar to an easing that began in late February two years ago after months of strong exports, said Doug Houghton, an analyst at Brock Associates, a commodity advisory firm in Milwaukee. The seasonal decline in U.S. sales could occur as newly harvested soybeans from Brazil and Argentina become available for export.

Still, the announcement of fresh U.S. export sales on Wednesday boosted futures since soybean stocks "are so tight that anything that hints at stronger demand, the market's going to be sensitive about," Mr. Houghton said.

Deferred soybean futures fell despite the rise in nearby futures Wednesday, since supplies are currently tight but a potentially large U.S. soybean crop this year would replenish supplies in the fall. A large winter storm that moved through the Midwest this week likely improved soil conditions ahead of spring planting.

November soybeans fell 1/2 cent, or 0.04%, to $12.57 1/4 a bushel.

Nearby corn futures rose, boosted by low delivery expectations for first-notice day. Corn also benefited from a fresh sign of growing corn demand. The U.S. Energy Information Administration said domestic ethanol production increased 1.9% to 812,000 barrels per day in the week ended last Friday, continuing a recovery from a low point a month ago.

March corn futures settled up 4 1/2 cents or 0.6% at $7.09 1/2 a bushel.

Wheat traded higher most of the day, but prices suddenly eased at the end of the session on technically driven selling. Much of the gains in the morning were likely driven by speculative funds buying futures to exit short positions, or bets on lower prices, traders said.

CBOT March wheat futures fell 1 1/2 cents or 0.2% at $7.04 1/4 a bushel. KCBT March wheat rose 1 1/2 cents or 0.2% to $7.34 1/4 a bushel. MGEX March wheat fell 1 3/4 cents or 0.2% to $7.87 1/4 a bushel.

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