U.S. grains: Soybeans at five-month high on sale to ‘unknown’

Chicago | Reuters — U.S. soybean futures notched a new five-month high on Tuesday after a U.S. Agriculture Department announcement of a large sale to an unknown destination sparked a round of buying by investment funds, traders said.

Soybeans trimmed losses early in the session to gain for the fourth consecutive day. Corn futures also rose and wheat closed well off of its session lows with speculative investors active in each pit, trade sources said.

The USDA announcement that U.S. exporters sold 568,000 tonnes of soybeans for delivery in the 2013-14 marketing year rattled markets. The sale would tighten an already snug balance sheet for U.S. soybean supplies.

Importers typically begin sourcing soybeans from South America at this time of year, but rain is delaying harvest of what is expected to be a record soy crop in Brazil.

“This report this morning is unbelievable,” Linn Group analyst Roy Huckabay said of the USDA announcement. “There were no bids on the PNW (U.S. Pacific Northwest) yesterday for rail beans by anybody for any period.”

CBOT March soybeans rallied on the news, finishing 12-1/2 cents higher at $13.99 per bushel, the highest level since Sept. 13 (all figures US$).

Commodity funds bought 7,000 soy contracts and 6,000 corn contracts, and bought and sold in equal amounts in wheat futures, the trade sources said.

USDA also said Egyptian importers canceled the purchase of 110,000 tonnes of U.S. soft red winter wheat, a decision that had more to do with rising U.S. grain prices than political turmoil, grain traders said.

CBOT March wheat fell nearly two per cent in the wake of the announcement before recovering and settling 2-3/4 cents, or 0.5 per cent, lower at $6.15 per bushel.

“The cancellation to Egypt was a sign of what was going on. U.S. wheat on the rally just got too expensive so we’re taking it back down,” Huckabay added.

It was Egypt’s biggest cancellation of a U.S. wheat purchase since September 2010, USDA data showed.

A forecast return to bitter cold temperatures in the central U.S. renewed concerns that fields of the dormant wheat crop not protected by snowcover could be damaged.

CBOT March corn gained 4-1/4 cents to $4.55-3/4, rebounding after two sessions of declines.

Corn futures, which fell 40 per cent in 2013, have climbed steadily this year. Futures were likely to remain between $4.40 and $4.60 per bushel as support from good demand is offset by pressure from last year’s record harvest.

“We’ll hug $4.50 probably for the next 30 days until we see that stocks report,” MaxYield Cooperative analyst Karl Setzer said, referring to USDA’s quarterly grain stocks report due at the end of March.

— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Christine Stebbins in Chicago, Michael Hogan in Hamburg and Colin Packham in Sydney.

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