US soya up for third day on tight supply
October 25, 2012: Chicago soybeans edged higher on Wednesday, rising for six out of the last seven sessions as the market was buoyed by strong demand and tightening supplies as US farmers hold back freshly harvested crops. Corn eased for a third day in a row on lacklustre demand for US supplies, while wheat slid 0.3 percent with losses being capped by concerns over production in top exporting nations.
Chicago Board of Trade November soy rose 0.1 percent to $15.55-1/2 a bushel by 0329 GMT. December corn lost 0.2 percent to $7.54-3/4 a bushel and December wheat gave up 0.3 percent to $8.66-1/2 a bushel. November soybeans are poised to break resistance at $15.57-1/4 and rise more to $16.01-1/2 per bushel, according to Reuters technical analyst Wang Tao.
The resistance is at the 23.6 percent Fibonacci retracement on the fall from $17.89 to $14.85-3/4, a break above which will open the way towards the 38.2 percent level. On the fundamental side, soybeans found support from tight global stocks and slow farmer selling as the US harvest winds down. Strong export demand for soybeans and a seasonal squeeze for empty vessels amid the harvest pushed up barge freight on the Mississippi and Illinois rivers which addded to pressure on cash values.
China may have to curb its huge soybean imports up until February 2013 because of tight supplies, and a continued trend of heavy Chinese buying could push Chicago prices up again, Hamburg-based oilseeds analysts Oil World said on Tuesday. Still, expectations of record soybean supplies from South America from March next year kept a lid on prices. Brazilian analyst Safras e Mercado raised its estimate of the country’s soybean production to a record 82.5 million tonnes from its July estimate of 82.3 million due to farmers’ expanding the area planted with the oilseed.
US corn was pressured by forecasts of slowing domestic consumption and weakening exports. “Corn demand needs to be rationed in both domestic and international markets and it appears that high prices are curbing demand,” said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia. The US government cattle-on-feed report on Friday showed the number of cattle placed in America’s feedlots in September was well below analysts’ average estimate and was the lowest September figure on record. Fewer cattle to feed in upcoming months would mean lower demand for corn.
US corn exports are also facing stiff competition from Brazil. The nation’s 2012 corn exports have already surpassed an annual record and the country could replace Argentina as the world’s second-largest exporter of the grain this year. Brazil exported 11.87 million tonnes of corn between January and the third week of October, beating 2007’s record of 10.9 million tonnes sold abroad in less than 10 months, data from the trade ministry shows.
Wheat prices were lower as well, but the market remains underpinned by concerns about crops in Australia and the United States and the prospect of an export ban in Ukraine. “We are still noting that there are a number of ongoing production concerns for wheat around the world,” said Mathews. “Much of the hard red winter wheat belt is bit drier than what we would like to see. In Australia, there are no forecasters seeing any decent rain for rest of the month.” Traders said on Friday that Ukraine’s agriculture ministry would ban exports of wheat from November 15 after bad weather hit the harvest.