Chicago / Reuters – U.S. soymeal climbed 2 per cent on Friday, capping the commodity’s best monthly performance since 1976, as short-term supply strains in the United States continued to fuel buying.
Soybeans also rose sharply and corn turned higher late, following gains in soymeal, while wheat declined on pressure from multiyear highs in the dollar that made the crops less competitive in global markets.
Soymeal futures climbed nearly 11 per cent this week alone, putting them up 29 percent in October, as a mix of harvest delays, slow farmer selling and transport congestion linked to record exports left operators scrambling for supplies.
The soymeal surge took some investors by surprise given the U.S. soybean harvest, expected to yield a record volume, is accelerating and should provide ample supply for processors who make soymeal animal-feed.
“We expect the soybean rally to break. The logistical railcar issues in the U.S. will ease, crush margins are good and processors are crushing hard to fill the pipeline,” Rabobank analysts said in a note.
“But even so, it might take a few more weeks until the situation has sufficiently relaxed. The key question is if this will happen before the December contracts expire, making short bets on December … a risky gamble,” they said.
Chicago Board of Trade December soymeal finished $9 higher at $389.00 per ton, near their 1-1/2 month high reached on Thursday. Soybeans for November delivery gained 22-1/4 cents to $10.46-1/2 per bushel, gaining almost 15 percent for the month for the largest such gain since June of 2008.
Agribusiness giant Bunge on Thursday cited slow farmer selling as a factor in its lower-than-expected third-quarter earnings, and its head said the slow pace of crop sales by farmers will likely stretch into next year.
Global supplies still ample
Corn futures edged higher and wheat lower after reaching three- and two-month highs respectively in the previous session as the dollar gained and the rouble fell, making Russian supplies more attractive to importers. The yen also lost ground to the dollar, pushing up U.S. corn prices into top market Japan.
The dollar index hit a four-year high after upbeat U.S. growth figures and expectations the Federal Reserve will start raising interest rates sooner than thought previously.
“We are seeing money come out of the broader commodity complex as the dollar goes to highs,” said Arlan Suderman, an analyst at Water Street Solutions.
CBOT December wheat fell 3-1/2 cents to $5.32-1/2 per bushel while CBOT December corn gained 2-3/4 cents to $3.76-3/4. Corn capped a 17.5 per cent monthly gain – the largest since July of 2012 – while wheat was up 11.4 percent in October, the best monthly performance since March.
The buying agency for top wheat importer Egypt issued a tender seeking wheat for shipment next month, results of which were expected on Saturday.
The International Grains Council (IGC) underlined large global supply by raising on Thursday its forecast for the 2014/15 global wheat crop by 1 million tonnes to a record 718 million tonnes, and its world corn crop estimate by 6 million tonnes to 980 million tonnes, approaching last season’s record 983 million tonnes.
– Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting by Julie Ingwersen in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore