"Now, it's soybeans' turn. The next two weeks will be critical for them.
There is a chance for catastrophic problems in soybeans. It's waiting for its
turn at moisture and so far it's been uh-oh, there's been no change in the
weather forecast," said grains analyst Don Roose of U.S. Commodities.
"A huge shortage of soybeans is a real possibility," he said, adding that a
drought in South America that devastated the crops in Brazil and Argentina, the
world's second and third largest exporters, had made it imperative for top
supplier the United States to avoid further crop losses.
Chicago Board of Trade spot August soybeans rose 2.7 percent to an
all-time high of $16.85-1/2 a bushel, surpassing the previous record of
$16.79-1.2 set just last week. New-crop November rose 2 percent to $16.48
per bushel.
Spot September corn rose 2 percent to $7.95, near a 13-month high of
7.96-1/2 a bushel on Tuesday and close to the record high of $7.99-3/4 set last
summer. New-crop December was up 1.7 percent at $7.84-1/4 a bushel.
Soymeal futures hit an all-time high of $514 per ton as feed supplies
in the United States continued to erode with the shrinking corn crop. Supplies
of the alternative feed distillers dried grain have also tumbled with the
slowing of ethanol production on the back of high corn prices.
"The soymeal basis has gone up $7 (per ton) in a week," said grains analyst
Charlie Sernatinger at ABN Amro in Chicago. "And the shorts are getting squeezed
out of the August (contract)," he added.
The surge in the soy complex, in addition to corn, will continue to cut into
margins for meat companies like Smithfield Foods, Tyson Foods
and others, and ethanol producers who are already cutting back output.
Weather updates showed more hot, dry weather in the U.S. Midwest where the
drought is centered, with the light rain forecast for the region's west and
southwest unlikely to provide much relief for crops.
Chicago Board of Trade wheat and headed higher in tandem with corn and
soybeans. It also was supported by drought in parts of Kazakhstan and Russia and
by rain delays to the harvest in France. The United States is the world's top
exporter of corn, soybeans and wheat.
September wheat rose 2 percent to $9.03-1/4 a bushel, off the session
high of $9.08-1.2, the highest in nearly 4 years.
Kazakhstan said it expects a below-average crop this year due to drought in
its northern grain belt. The country said hot and dry weather would cut its
grain crop to 14 million tonnes this year, a decline of 48 percent on last
year's post-Soviet record and undershooting the average of 17 million tonnes
over the last nine years.
Russia may export just 10 million tonnes of wheat this year as grain exports
fall by half from last year's record 28 million tonnes due to low stocks and a
drought in the southern breadbasket regions, analyst SovEcon said on Tuesday.
The Energy Information Administration said on Wednesday ethanol production
fell 2.3 percent last week to the lowest level since the government began
tracking that data in June 2010.
Jeffries Back oilseed analyst Anne Frick said she had lowered her estimate
for 2011/12 (Sept/Aug) U.S. soybean carryout to 146 million bushels, below the
U.S. Department of Agriculture's current estimate of 170 million bushels.
"It (soybeans) reflects the fact usage is too strong relative to the supply.
Anytime you have a weather market like this it also makes the old-crop stocks
more valuable," said Frick.
U.S. Agriculture Secretary Tom Vilsack said while the drought will result
in sharply higher crop prices, there was no need yet to see a reduction in the
production of corn-based ethanol.
The surge in wheat prices was taking a toll on end-users.
"The dramatic rise in grain prices in the past few weeks is shaping up to be
a serious financial blow for wheat importing countries," a German trader said.
"African and Middle Eastern countries are now facing painful rises in import
bills."
The latest example was Jordan, which canceled an international purchase
tender for 100,000 tonnes of wheat on Tuesday because of high prices but issued
a new tender on Wednesday.
in.reuters.com |
