U.S. grains: Soybeans rally on slow harvest pace, quality concerns

CBOT November 2018 soybeans, with 20-day moving average. (Barchart)

Chicago | Reuters — U.S. soybean futures jumped 2.8 per cent on Monday on poor Midwest harvest conditions, coupled with reminders of strong domestic crushing demand and signs of U.S. soy cargoes headed to China, analysts said.

Corn and wheat followed the firm trend.

Chicago Board of Trade November soybean futures settled up 24 cents at $8.91-1/2 per bushel after reaching just off the session top of $8.92, the contract’s highest since Aug. 21 (all figures US$). CBOT December corn was up 4-1/2 cents at $3.78-1/4 a bushel and December soft red winter wheat rose 7-3/4 cents to $5.25 a bushel.

Soybeans led the rally on worries that wet and cold conditions in the Midwest that have slowed the harvest could also lead to quality problems with soybeans and corn.

Drier weather is expected in the second half of October. Heavy rains last week may have damaged some crops and also delayed the harvest, boosting demand at elevators and processors that need supplies to fuel the active pace of crushing.

“Bean harvest has virtually been at a standstill,” said Mark Schultz, chief analyst at Minnesota-based Northstar Commodity Investment Co. “There is nothing for sale.”

Ahead of the U.S. Department of Agriculture’s weekly crop progress report due later on Monday, analysts on average expected the government to show the harvest of both the U.S. corn and soybean crops as 40 percent complete.

Additional support stemmed from USDA’s weekly export inspections report, which showed two U.S. soybean cargoes earmarked for mainland China, the first since mid-September.

The inspections data suggest China is covering needs until the South American soy harvest begins in early 2019, said analyst Terry Reilly with Futures International in Chicago.

“If we see these numbers rise in the weekly inspections,” Reilly said, “then we know China is in real need of beans, and they will pay up for it.”

Domestically, the National Oilseed Processors Association said its members crushed 160.8 million bushels of soybeans in September, topping an average of trade expectations for 158.9 million.

Corn rose on short-covering and ideas that the U.S. corn yield might be lower than USDA’s Oct. 11 forecast of 180.7 bushels per acre.

“Traders are still expecting the U.S. corn yield to decline in November,” Reilly said.

Commodity funds hold a net short position in CBOT corn, soybean and wheat futures, leaving all three markets vulnerable to bouts of short-covering.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Mark Weinraub in Chicago, Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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