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GRAINS-Soy rises to 9-month high on tight stocks

Published 06/08/2009, 12:29 PM
Updated 06/08/2009, 12:32 PM
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* Soy firm in nearby but deferred contracts weak

* Firm dollar, falling stock market hit corn, wheat

* Wheat under pressure from harvest of winter crop (Recasts, updates prices, market activity to CBOT open; new byline, changes dateline, previously PARIS/SEOUL)

By Mark Weinraub

CHICAGO, June 8 (Reuters) - Tight stocks of U.S. soybeans fueled a rally in nearby soybean futures to a nine-month high on Monday, but deferred contracts weakened due to expectations of a plentiful harvest, traders said.

"Ideas are that we will see a very small ending stocks estimate out of the U.S. Agriculture Department," said Jack Scoville, vice president at Price Futures Group in Chicago. "That seems to be really doing a number on the July-November bean spread."

Firmness in the U.S. dollar and a falling U.S. equities market caused Chicago Board of Trade corn and wheat futures to weaken.

Good planting weather in key areas of the eastern Corn Belt during the weekend, as well as some showers in states such as Iowa, also contributed to the drop in corn.

"It was wet in the western Corn Belt over the weekend which favors crop development and it was dry in selected states in the eastern Corn Belt that are behind," Citigroup analyst Terry Reilly said. "We have a combination of the fundamentals driving the market (as well as) the outside markets such as the U.S. dollar."

Dry weather in the southern U.S. Plains allowed farmers in that area to make good progress in the harvest of the winter wheat crop, pressuring futures prices.

At 11:20 a.m. CDT (1620 GMT) CBOT soybeans for July delivery were up 6-1/4 cents $12.31-3/4 a bushel. The nearby contract hit a high of $12.39-3/4 earlier in the session, its highest level since Sept. 3.

"Tight supply concerns are pressuring soybeans and the market will remain well supported for the time being, as concerns of lower crop yields and strong export demand will continue to dominate the market," said Han Sung-min, a trader at KEB Futures.

The U.S. Agriculture Department was set to release its monthly crop production report on Wednesday morning. That will provide the government's latest forecast for key figures such as soybean ending stocks as well as wheat and corn production.

Analysts surveyed by Reuters expect the USDA to cut projected end-season U.S. soybeans stocks to 114 million bushels, the lowest supply seen since August 1977, due to strong export demand.

USDA's current estimate for U.S. soy stocks at the end of the marketing year on Aug. 31 is at a five-year low of 130 million bushels.

Operators said they also will watch the USDA report for projections for corn supply next season after a heavily disrupted planting season in the United States. Front-month contracts Prices at 11:18 a.m. CDT (1618 GMT)

Pct YTD

Last Change Chg Close Pct Chg --------------------------------------------------------------- CBOT corn Cc1> 4.35 -0.09 -2.0 4.07 6.9 CBOT soy Sc1> 12.3075 0.0525 0.4 9.7225 26.6 CBOT meal SMc1> 400.6000 4.6000 1.2 300.5 33.3 CBOT soyoil BOc1> 0.3936 -0.0037 -0.9 0.3329 18.2 CBOT wheat Wc1> 6.04 -0.1925 -3.1 6.1075 -1.1 CBOT rice RRc1> 12.575 -0.04 -0.32 15.34-18.025 US crude CLc1> 68.17 -0.27 -0.4 44.60 52.8 Dow Jones .DJI> 8637.07 -126.06 -1.4 8776.39 -1.6 Gold XAU=> 948.3000 -7.0000 -0.7 ####### 8.0 Euro/dollar EUR=> 1 0 -0.5 1.3978 -0.8 Dollar Index .DXY> 81.055 0.387 0.48 81.151-0.1183 Baltic Freight .BADI> 3646 -163 -4.28 774371.059 (Additional reporting by Valerie Parent in Paris and Miyoung Kim in Seoul; Editing by David Gregorio)

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