US soy eases, wheat dips on economy worries
SINGAPORE, 25 October 2012: US soybean futures fell half a percent on Thursday to snap three straight sessions of gains and corn was little changed, with weak corporate earnings and concerns over global economic growth dragging on investor appetite for risk.
Wheat edged lower after climbing nearly 2 percent on Wednesday on hopes that Ukraine’s ban on wheat exports would boost demand for US grains.
Asian shares steadied on Thursday, but sentiment remained vulnerable with weak corporate earnings continuing to undermine investor confidence.
“For the past few days soybeans have managed to finish stronger in the midst of weak equity markets, so there is a little bit of catch up here,” said Victor Thianpiriya, an agricultural strategist at ANZ in Singapore.
“Having said that, soybeans have rallied 70 to 80 cents since the USDA report as the outlook for beans is still pretty positive. There are no signs of demand letting off.”
The US Department of Agriculture’s monthly report on Oct. 11 showed a stocks-to-use ratio that would be the tightest since the mid-1960s following a devastating drought across the US grain belt this summer.
Chicago Board of Trade November soy had dropped 0.5 percent to $15.63 a bushel by 0253 GMT. December corn rose a quarter of a cent to $7.54-3/4 a bushel and December wheat gave up 0.1 percent to $8.82-3/4 a bushel.
US soybeans have gained 5.6 percent since last week’s three-and-half month low, supported by tightening US supplies and no let up in demand from China, the world’s biggest buyer.
On Wednesday, soybeans rose over 1 percent on strong cash markets and a fresh US soy sale of just over 100,000 tonnes to an unknown destination, likely China. Cash soybean basis bids rose from 3 to 5 cents per bushel at some processing plants in Iowa and Illinois.
In the wheat market there has been support from diminishing supplies in the Black Sea region, which could result in higher demand for US wheat.
Ukraine’s agriculture minister on Wednesday said the country would ban wheat exports from Nov. 15 after a weather-damaged harvest.
“The focus now is on what Russia will do after Ukraine’s move,” said Serene Lim, a commodities analyst at Standard Chartered Bank in Singapore. “If Russia follows Ukraine in banning exports, I think we will see significant gains in wheat prices.”
Trade sources said Ukraine’s reputation as a reliable supplier would be tested by the upcoming ban on exports adding that the United States had ample stocks to make up for the Ukrainian shortfall.
In its October crop report, the USDA listed Ukraine’s wheat exports for the current (2012/13) marketing year at 4.0 million tonnes, down from 5.44 million the previous year (2011/12).
Ukraine would have been the ninth largest global wheat exporter and would have accounted for 3 percent of the total world wheat exports of 130.87 million tonnes, according to the USDA’s October crop data.