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Grains- soybeans off 4-year high, corn futures hold steady

Published 04/30/2012, 05:59 AM
Investing.com - Soybean futures were down for the first time in five days on Monday, as last week’s rise to the highest level since July 2008 prompted investors to cash out of the market to lock in gains, while corn futures held steady after Friday’s 5% rally.

On the Chicago Mercantile Exchange, soybeans futures for July delivery traded at USD14.8538 a bushel during European morning trade, shedding 0.55%.  

It earlier fell by as much as 0.35% to trade at a session low of USD14.8513 a bushel. Prices rose to USD15.0638 a bushel on Friday, the highest since July 13, 2008.

Soybean futures rose above the key USD15.00-a-bushel level on Friday for the first time in nearly four years amid further evidence demand for U.S. soy from top consumer China remains strong.

The U.S. Department of Agriculture said that U.S. farmers sold 1.4 million tonnes of soybeans last week, above a range of trade expectations for 850,000 to 1.3 million tonnes.

Top consume China bought nearly 60% of the weekly total.    

In addition, the USDA confirmed a sale of 110,000 tonnes of U.S. soybeans to China for delivery in the 2012-13 marketing year that begins September 1.

The agency reported another sale of 116,000 tonnes to an unknown destination, thought by many market participants to be China as well.

China is the world’s largest soybean consumer and is expected to account for nearly 60% of global trade of the grain in the 2011-12 season, according to the USDA.

Meanwhile, ongoing concerns over drought-stricken crop in major South American growers provided further support.

The Buenos Aires Grains Exchange on Thursday lowered its outlook for Argentina’s soy crop to 43 million tonnes, down from a previous estimate of 44 million.

The downgrade fuelled speculation the USDA will slash its own estimates on the country’s soy output in its next supply-and-demand report due in early May.

Argentina is a major soy exporter and competes with the U.S. for business on the global market. A downbeat Argentinean crop outlook could increase demand for U.S. supplies.

Soybean prices have rallied nearly 20% since the beginning of February, and are up almost 6% in April, as market sentiment has been dominated by concerns over distressed crops in major South American soy growers and on hopes demand from top consumer China will remain robust in the near-term.

Elsewhere on the Chicago Board of Trade, corn futures for July delivery traded at USD6.2463 a bushel, easing down 0.1%. Earlier in the day, prices hit USD6.3075 a bushel, the highest since April 9.

Corn prices surged 6.15% last week, the largest weekly gain in almost 11 months. Futures rallied 5% on Friday after the USDA confirmed a sale of 1.56 million metric tons of U.S. corn last week, the largest one-day sale of U.S. corn since 1991 and the sixth largest export sale on record.

While the agency did not confirm the buyer, market participants speculated the bulk of the shipment was headed for China.

The USDA also reported another 120,000 metric tons of corn sold for delivery to China, as a confirmed buyer, in the current marketing year.

In total, the USDA reported sales of 2.84 million metric tons to China or unknown buyers last week.

The U.S. produced 38% of the world's corn last year, making it the both world's largest corn producing nation and the largest exporter of the grain, while China is the world’s largest consumer of the grain.

Market participants were looking forward to the U.S. Department of Agriculture’s weekly planting progress report after Monday’s closing bell on the CBOT.

Elsewhere on the Chicago Mercantile Exchange, wheat for July delivery declined 1.2% to trade at USD6.4125 a bushel.

Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.

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