U.S. grains: Corn, soybeans and wheat up on spillover from soymeal

Chicago / Reuters – U.S. soymeal surged 7 per cent on Wednesday, increasing this week’s gains to the largest in six years as a slow start to a record soybean harvest coupled with slow traffic on the nation’s railroads forced crushing plants to cover short cash positions in the futures market.

Soybeans jumped nearly 3 per cent and corn 1.8 per cent, with each futures contract pushed higher by the gains in soymeal.

CBOT December soymeal was up $29 at $404.10 per ton at 12:40 a.m. CDT (1740 GMT), with the contract breaching the psychological threshold of $400 for the first time since June.

“The markets are being supported by the quite phenomenal rally we are seeing in soymeal, which is creating spillover buying in soybeans, corn and wheat,” said Ole Hansen, head of commodity strategy at Saxo Bank. “The whole sector is being pulled higher by soymeal as there is concern about the low level of U.S. new crop soybean sales to crushers.”

U.S. exporters have sold a record 6.245 million tonnes of soymeal this year, of which only 229,700 tonnes have been shipped out during the marketing season that started on Oct. 1. Traders have pulled rail offers for the animal feed due to worries they cannot get fresh supplies or the railcars to ship them, brokers said.

“Until you solve the transportation problems, you are forcing guys to come to the board to get coverage,” said Tom Fritz, grains analyst at EGF Group in Chicago.

Record-large U.S. soybean and corn harvests have boosted to demand for hopper cars already in short supply, while rail traffic has slowed on tracks clogged with tankers hauling oil produced from fields in the northern U.S. Plains and Canada.

Grains analyst Charlie Sernatinger of ED&F Man Capital compared this week’s soymeal market with the logistics woes that pushed oats prices to record highs earlier this year.

“If you don’t think that meal can go higher, just look at what happened to March oats last spring,” he said.

Soybeans for November delivery jumped 33-1/4 cents to $10.41-1/4 per bushel, the highest level since Aug. 22. Corn for December delivery was up 7 cents to a nine-week high of $3.71-1/2.

CBOT December wheat was up 8-1/4 cents at $5.39, bolstered by worries that cold weather could damage the crops of
key exporters in the Black Sea region.

A return of warmer weather in November will be crucial for the 2015 grain crop in Russia and Ukraine after a lack of rain and early cold left plantings vulnerable, analysts and forecasters said.

– Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting by Julie Ingwersen in Chicago, Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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