Chicago | Reuters — U.S. soybean futures rallied for the third day in a row on Wednesday to reach a nine-month high, drawing strength from data released earlier in the week that showed appetite for the oilseed remained strong at domestic crushers, traders said.
The strength in soy failed to carry over into the grains, and wheat and corn posted sharp declines. Wheat led the way, giving up nearly two per cent on expectations for a turn to better crop weather in the U.S. Plains following a cold, dry winter.
“You look at the extended forecasts and it starts to show some pretty decent amounts (of rain) in the southern and central Plains,” said Shawn McCambridge, grains analyst at Jefferies Bache. “It is certainly not going to be a situation where we fully erase the drought, but we really do not have to. If we warm up with adequate moisture, some of the damage that we may have suffered under these winter conditions could be at least partially reversed.”
Soy’s strength also spurred some technical buying and renewed interest from investment funds seeking to boost their positions in a market that has gained 3.9 per cent this week.
“It has been an exciting week thus far for soybeans, and for the old-crop new-crop spreads in particular,” Matt Zeller, director of market information at INTL FCStone said in a note to clients. “Yesterday’s National Oilseed Processors Association crush only added gasoline to the fire with a number above even the most bullish of trade expectations. Spot soybeans are desperately trying to ration away what demand they can.”
The improving weather that pressured wheat also weighed on corn as warmer temperatures across the Midwest should allow farmers to start planting tasks.
“We should see field work pick up noticeably next week in the western Corn Belt as the weather improves,” CitiGroup futures specialist Sterling Smith said in a research note. “The strong soybeans are doing little to support the corn.”
Warming temperatures also will lower the threat of winterkill facing the soft wheat crop in the Midwest as well as the hard wheat in the U.S. Plains.
“I don’t think it is going to be any kind of widespread or long-lasting damage to the wheat crop,” Kyle Tapley, meteorologist at MDA Weather Services, said after temperatures had plummeted below freezing in many growing areas.
Chicago Board of Trade soybeans for May delivery gained 17-1/2 cents to close at $15.18-3/4 a bushel and hit a contract high. The front-month contract peaked at $15.22-3/4 a bushel, its highest on a continuous basis since July 23, during the overnight session.
The closely watched July/November spread widened by 13 cents, supported by expectations that stocks will be tight until the fall, when U.S. farmers will likely harvest a huge crop following record seedings during the next few months.
The National Oilseed Processors Association said on Tuesday its U.S. members crushed 153.8 million bushels in March, up from 141.6 million in February. A Reuters poll had forecast a monthly crush of 146.1 million bushels.
CBOT May corn was 6-1/4 cents lower at $4.97-1/2 a bushel, and CBOT May wheat fell 13-3/4 cents to $6.88 a bushel.
— Mark Weinraub is a Reuters correspondent covering grain markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago.