Soybean futures rallied to a five-month high on speculation that demand will increase for U.S. exports after drought damaged crops in South America. Corn also rose.
Soybean output in Brazil, the world’s largest grower after the U.S., will drop to 68 million metric tons this year from 75.3 million in 2011, researcher AgRural Commodities Agricolas, based in the state of Parana, said today. The crop in Argentina will be 44.5 million tons, down from a January forecast of 49 million, the Rosario Cereals Exchange said Feb. 23.
“Smaller crops in South America continue to provide support for the market,” Roy Huckabay, an executive vice president at the Linn Group in Chicago, said in a telephone interview. “People are looking for China to switch some purchases from South America to U.S. origin.”
Soybean futures for May delivery rose 1.2 percent to close at $13.025 a bushel at 1:15 p.m. on the Chicago Board of Trade, after reaching $13.04, the highest for the most-active futures since Sept. 22. Prices rose for a sixth straight session, the longest rally this year. The commodity is up 8.6 percent in February, heading for the biggest monthly gain since December 2010.
Corn futures for May delivery advanced 0.7 percent to $6.485 a bushel on the CBOT, the fourth straight gain. The grain rose on speculation that China may boost purchases from the U.S. to rebuild inventories before the growing season, after domestic prices reached a five-month high, Huckabay said.
“It’s cheaper to import U.S. corn into China than to use domestic supplies,” Huckabay said.
The U.S. was the world’s largest exporter of both commodities in the year that ended Sept. 30, according to government estimates. Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion.
Argentina is the top exporter of livestock feed and cooking oil made from soybeans.