Soybeans Rise, Halt Slide, as Cheaper Supply May Boost U.S. Export Demand
Soybeans rose for the first time in more than a week on speculation that the lowest prices since March will boost demand for supplies from the U.S., the world’s largest grower and shipper.
Exporters in the U.S. sold 478,462 metric tons during the week ended May 13, double the average from the prior four weeks, the Department of Agriculture said today. Of the total, 60,000 tons were purchased by China, the world’s biggest importer. Argentina farmers are withholding newly harvested supplies in a bet the peso will plunge, boosting returns on exports, Rosario- based commodity trader Alabern, Fabrega y Cia said.
“Export sales were very good and constructive for prices,” said Anne Frick, a vice president of research for Prudential Bache Commodities LLC in New York. “Argentina and Brazil are not selling their crops, and that is boosting demand for U.S. supplies” at a time when importers usually shift to newly harvested soybeans from South America, Frick said.
Soybean futures for July delivery rose 5.5 cents, or 0.6 percent, to $9.44 a bushel on the Chicago Board of Trade, after losing 2.8 percent since May 11. The commodity touched $9.31 today, the lowest level for the most-active contract since March 31.
Annual consumption in China will increase by as much as 8 percent in the next three or four years as the livestock industry expands, boosting demand for high-protein feed, said Robert Day, the general manager of South China operations for Cargill Inc., the largest privately held U.S. company.
Soybean imports by China have outpaced forecasts for five years, Day said. The USDA this month raised its import estimate for the marketing year through Sept. 30 to 46 million tons from 43.5 million in April, and predicted 49 million tons for 2010- 2011.
The country “will continue to create more wealth for its citizens,” Day said at an industry meeting in Dongguan May 18. “It will continue to consume more meat, which means it will continue to need more grain and oilseed products.”
Combined soybean output in Brazil and Argentina, the biggest exporters behind the U.S., will jump 36 percent this year to a record 122 million tons, the USDA estimates.
Farmers in Argentina are storing their soybeans to preserve wealth as President Cristina Fernandez de Kirchner pursues a weak-peso policy intended to stimulate exports from the country, South America’s second-largest economy. The sales slowdown has boosted prices in Argentina and Brazil, making U.S. exports more competitive for shipments to Asia from ports in the Pacific Northwest, Frick said.
Argentine producers are stockpiling beans in special bags on their farms rather than selling the crops, according to Omar Barchetta, a vice-president of the Rosario-based Argentine Agrarian Federation farmers group.
“There was talk yesterday that as much as 250,000 tons of sales from South America were switched to the U.S.,” Frick said. “Prices will likely rise until we see increased exports from South America or cancelations of U.S. sales” from China, Frick said.
The soybean crop in the U.S. was valued at $31.8 billion last year, second only to corn at $48.6 billion, government figures show.