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Soybeans steady near 3-month high on S. America crop woes

Published 02/07/2012, 06:21 AM
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Investing.com - Soybean futures were up for the sixth consecutive day on Tuesday, the longest streak of gains since mid-December as ongoing concerns over soy crops in Brazil and Argentina boosted demand expectations for U.S. supplies.

On the Chicago Mercantile Exchange, soybeans futures for March delivery traded at USD12.3550 a bushel during European morning trade, edging 0.4% higher.  

It earlier rose by as much as 0.55% to trade at a session high USD12.3938 a bushel. Prices rallied to USD12.4387 a bushel on Monday, the highest since October 21.

Soy prices continued to draw support from concerns over crop conditions in major South American soy-producers. On Monday, grains analyst Celeres lowered its forecast for Brazil's 2011-12 soybean crop to 72.04 million tonnes, down from last month’s estimate of 74.4 million.

The downbeat outlook came after closely-watch industry research group Informa Economics lowered its forecast for soy production in Argentina and Brazil.

According to the group, Argentina's soybean crop was now expected to total 46.5 million tons, down from previous estimate of 51 million tons, and slashed its estimate for Brazil by 2 million tons from a previous estimate to 70 million.

The gloomy South American crop outlook fuelled speculation China would import less soybeans from Argentina and Brazil and increase its reliance on U.S. supplies.  

China imports 60% of soybeans shipped around the world, with the bulk of its purchases coming from the U.S. and Brazil, the world's top exporters.

Export shipments of U.S. soybeans last week were above 1 million tonnes for the third week in a row, U.S. Agriculture Department data showed on Thursday.

Meanwhile, markets were looking forward to Thursday’s closely-watched USDA’s World Supply and Demand Report for revised forecasts of South American crop production.

Argentina and Brazil are major soybean exporters and compete with the U.S. for business on the global market. A downbeat crop outlook in the South American countries would likely mean greater demand for U.S. supplies.

Elsewhere, agricultural traders continued to eye developments surrounding talks aimed at restructuring Greek debt. Greek Prime Minister Lucas Papademos was to meet with coalition leaders later in the day to discuss the implementation of additional fiscal measures needed to secure a second bailout, after failing to strike a deal on Monday.

European Union officials have said a final agreement on Greece’s EUR130 billion bailout much be approved by February 15, in order to avert a default when a EUR14.5 billion bond repayment comes due on March 20.

Elsewhere on the Chicago Mercantile Exchange, wheat for March delivery shed 0.68% to trade at USD6.6363 a bushel, while corn for March delivery slumped 0.35% to trade at USD6.4138 a bushel.

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