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Soybeans steady near 8-month high on strong demand for U.S. soy

Published 04/09/2012, 06:21 AM
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Investing.com - Soybean futures held steady near the highest level since September on Monday, after U.S. export data released last week pointed to further evidence of export demand shifting to the U.S. from South America.

On the Chicago Mercantile Exchange, soybeans futures for May delivery traded at USD14.3250 a bushel during European morning trade, easing up 0.1%.  

It earlier rose by as much as 0.55% to trade at USD14.4662 a bushel, the highest since September 1.

Floor trading on the Chicago Mercantile Exchange was closed on Friday in observance of Good Friday. European grain futures markets are closed on Monday for Easter, resulting in thin liquidity conditions.    

Soy prices continued to draw support from U.S. export data released last Thursday showing that U.S. farmers sold 1.112 million tonnes of soybeans last week, up 88% from a week earlier and above a range of estimates for 0.60 million tonnes to 0.85 million.

Soybean prices have rallied nearly 17% since the beginning of February as market sentiment has been dominated by concerns over distressed crops in major South American soy growers and on hopes demand from top consumer China will remain robust in the near-term.

Concerns over soy crops in Brazil lingered after influential industry group Informa Economics cut its forecast for Brazil's 2011-12 soybean production. The industry group now sees Brazil harvesting 66.5 million metric tons of soybeans, down 2.2% from the firm's previous forecast of 68.0 million tons.

Informa also lowered its outlook for Argentinean soybean output to 45 million tonnes from a previous estimate of 47.5 million.

The gloomy South American crop outlook fuelled speculation the USDA will further cut estimates of soybean output from Brazil and Argentina when it releases its updated global supply and demand outlook on March 30.

Last month, the USDA lowered its combined soybean production estimates for Brazil and Argentina and said that reduced South American output will boost U.S. exports by 22% to a record 42.2 million tons in the marketing year that begins in September.

Brazil and Argentina are major soy exporters and compete with the U.S. for business on the global market. Downbeat South American crop prospects could increase demand for U.S. supplies.

Prices came off their highest levels of the session as appetite for riskier assets weakened after data showed the rate of inflation in China rose faster than expected, fuelling speculation that Beijing might delay further easing of monetary policy.

The sharp slowdown in U.S. jobs growth also raised concerns about the strength of the world's largest economy, further weighing on sentiment.

The U.S. Department of Labor said Friday that nonfarm payrolls rose by a meager 120,000 in March, the lowest since December and well below expectations for a 203,000 increase.

It was the first time since November that hiring failed to top the 200,000 level, renewing concerns over the health of the U.S. economy.

Elsewhere on the Chicago Mercantile Exchange, wheat for May delivery was flat to trade at USD6.3875 a bushel, while corn for May delivery added 0.15% to trade at USD6.5888 a bushel.

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