Commodity Blog

Commodity Prices – Soybean

Soybeans gained today after three sessions of losses on speculation that adverse weather in South America will bolster demand for US exports. The US Department of Agriculture predicted that soybean exports from the United States will climb 14 percent. The Department estimated that US stockpiles of the grain will shrink to 145 million bushels by August 31, 2013, from this year’s 210 million. Soybeans jumped from $14.2775 to $14.4700 per bushel as of 20:05 GMT today on CBoT.

Oil was down today extending its losses after the US Energy Department reported yesterday that US stockpiles grew. US inventories of crude climbed by 3.7 million barrels to 379.5 million barrels last week — the highest level since 1990. Rumors that Saudi Arabia boosted output were also negative for oil prices. Brent crude fell today from $112.73 to $112.57 per barrel on ICE.

Soybean futures gained today as adverse weather hurt crops in Argentina and Brazil, boosting demand for US exports. The US Department of Agriculture reported that the United States were selling about 100,000 of metric tons daily, rising 10 times since the beginning of April. China was the biggest buyer. Soybeans closed at $14.7450 per bushel today on CBoT, following the drop from $14.6825 to $14.5800.

Crude oil slumped today as growth of US nonfarm payrolls was much smaller than was predicted by analysts. The payrolls rose just by 115,000 in April, while an increase of 173,000 was expected. That confirmed the earlier data that showed slowdown of US employment growth. The report fueled concerns that the global economic recovery is faltering. June futures for delivery of crude oil dropped as much as $2.11 to $100.43 per barrel (the lowest since February 14) before trading at $100.66 as of 13:46 on NYMEX today. Brent oil fell from $116.09 to $113.20 per barrel on ICE after touching $111.76 — the lowest price since February 2.

The ongoing drought in South America, the biggest oilseed producer in the world, continues to heat up the prices of everything related to cooking oil — from soybeans to palm oil. Meanwhile, experts’ forecasts project an elevated demand for this type of agriculture in Asia this year despite the overall decline in commodity consumption.

The US farmers have switched a significant part of their fields from the oilseed (mainly soybean) to corn on a higher corn prices last year. Now the lack of the soybean crops is driving the commodity up. It’s in a strong uptrend since mid-December of 2011. The US Department of Agriculture forecasts that the reserve-to-demand ratio for the main oil plants will fall this year to the lowest levels in decades.

Decreasing production of the soybean oil may spur the growth in palm oil market. Palm oil is the most popularly consumed edible oil in the world and, while its production isn’t affected by such adverse weather conditions as soybean. Its demand is going to grow this year. Market analysts expect the palm oil to be in an uptrend at least until the fourth quarter of 2012 when the commodity surplus reaches its peak.

Soybean rose from $14.2125 to $14.3000 per bushel as of 15:35 GMT on CBoT today. Soybean oil went up from $0.5573 to $0.5615 per pound during the day.

Gold advanced as traders continued to speculate that the Federal Reserve may stimulate the US economy. The poor payrolls last week have set markets in risk aversion mode, hurting most commodities, but benefiting precious metals. The 
Standard & Poor’s GSCI Spot Index of raw materials fell as much as 1.5 percent yesterday. Gold was up from $1,649.00 to $1,659.20 per ounce on COMEX yesterday, before opening at $1,654.70 today.

Soybeans reached the new high this year on the forecast of rising demand in China. The Asian country posted an unexpected trade surplus, reducing fear of the economic slowdown. Yet debt problems in Europe and the poor employment data in the United States trimmed optimism. Some analysts said that the expected demand from China doesn’t warrant the current high price. Soybeans reached $14.5225 yesterday on CBoT, the highest level since August 31.

Copper fell today for the third day, but that hasn’t deterred experts from being bullish on the industrial metal. The reason for this is the positive outlook for the US economy, caused by improving employment. Jobless claims fell from 363,000 to 357,000 last week, according to today’s report. Tomorrow, non-farm payrolls are expected to confirm that employment is rising steadily. Copper price was down from $3.8030 to 3.7915 per pound as of 18:52 GMT today on COMEX.

Soybeans continued to rally to a new record today on the forecast that adverse weather conditions will hurt crops in South America. Brazil may harvest 66 million metric tons, lower that the 68.5 million forecast by the US Department of Agriculture. Demand for US crops should rise with the shortage of supply from South American countries. The United States are the biggest producer of soybeans in the world, while Brazil is the second largest. Soybeans advanced from $14.2000 to $14.3225 per bushel today on CBoT, while the intraday high of $14.3425 was the same as the high on April 3, which was the highest price since September 5.

Corn jumped today after the US Department of Agriculture reported that inventories reached the lowest level in eight years. Wheat and soybeans also surged.

Corn stocks fell 8 percent to 6.01 billion bushels as of March 1 from a year ago. That was the lowest level in the period since 2004.

Wheat stockpiles fell 16 percent from the previous year to 1.20 billion bushels. That was the lowest level in three years.

Soybeans inventories were up 10 percent. Still, prices rose as US farmers plan to sow 73.902 million acres this year, 1.4 percent less than in 2011 and the lowest in five years.

Rabobank International wrote in its report today:

Given the long season ahead and the risk of weather disruptions along with low inventories, the outlook for soybean and corn crops remains bullish.The upside risk is considerable, and if crop potential is threatened by weather, we would expect prices to visit new highs.

Corn price climbed from $6.0550 to $6.4400 per bushel on CBoT today. Soybeans advanced from $13.5450 to $14.0200 per bushel in Chicago, while the intraday high of $14.1600 was the highest price since September 12. Wheat surged from $6.1525 to $6.5875 per bushel today.

Soybeans advanced on the speculation that China’s demand for US supply will increase. Grain.gov.cn said that Chinese soybean imports may advance more than 20 percent in the first half of this year. Soybean futures are rallying for the fourth straight session. Price for soybeans rose from $13.6850 to $13.7350 per pound as of 17:47 GMT on CBoT today, while intraday it reached $13.7750 — the highest level since September 15.

The positive signs from the United States also boosted crude oil. US inflation rose 0.4 percent in February, following the 0.2 percent increase in January. Industrial production in January was revised from zero change to 0.4 percent growth. April futures for delivery of crude oil gained $1.13 (1.1 percent) to $106.24 per barrel as of 12:49 on NYMEX. Brent rose from $122.93 to $125.15 on ICE.

Commodities, including gold and rubber, advanced today as the swap of the Greek debt proceeds. Holders of Greek bonds are encouraged to swap them for the ones with lower yield as an aid from the private sector for the indebted country. Central banks worldwide were keeping their monetary policy unchanged, signaling that the world economy is stabilizing. Gold price was up from $1,685.60 to $$1,701.80 per ounce as of 21:08 GMT on COMEX today. Contract for delivery of rubber in August advanced as much as 1.5 percent to 329.5 yen per kilogram ($4,057 per metric ton) on the Tokyo Commodity Exchange before trading at 327.4 yen.

Soybeans rose today as adverse weather in South America threatened crops, boosting demand for supplies from the United States. The US Department of Agriculture reported that last week overseas importers bought 1.015 million metric tons of soybeans from the USA for delivery before August 31. At the same time, experts predict that China may increase its soybean imports by 5.7 percent next year. Soybeans rallied from $13.2125 to $13.3050 on CBoT today.

Crude oil fell today after Europe’s request for help was declined on the Group of Twenty meeting until the European Union will boost its financial firewall to defend from the debt crisis. The members of G20 were unhappy with slow reaction to problems and long time needed by EU members to make any meaningful decision. April contract for delivery of crude oil dropped as much as $1.21 to $108.56 per barrel on NYMEX. Brent crude slid from $125.25 to $123.30 per barrel as of 23:12 GMT on ICE today.

Soybeans gained today, reaching five-month record, on forecast that declining supply from South America may lead to higher demand for US exports. Forecasters predict that soybean yield in Brazil will drop to 68 million metric tons in 2012 from 75.3 million in the preceding year. Estimate of Argentinean harvest was revised down to 44.5 million tons from the January forecast of 49 million. Soybean price climbed from $12.7800 to $12.9350 per bushel on CBoT today and touched $12.9500 — the highest level since September 22.

Corn and soybeans fell on forecast that rains may alleviate drought in South America. Global Weather Monitoring predicted that about 90 percent of areas planted with soybeans in Argentina and Brazil will get as much as 3 inches (7.6 centimeters) of rainfall. Previously, the region suffered from drought, therefore the forecast increases prospects for output.

Returning worries about the debt crisis in the European Union also hurt the commodities. European leaders were meeting yesterday at summit in Brussels. Investors are concerned that previously planned measures won’t be enough to contain spread of the problems across the eurozone.

Corn traded near $6.3200 per bushel today as of 00:43 GMT on CBoT, following the slump from $6.3925 to $6.3200 yesterday. Soybeans traded at $11.8900 per bushel today after falling from $12.1425 to $11.8525.