Saturday November 01, 2014

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U.S. soybeans jump on South American shipping delays

Corn lower ahead of expected large planting estimate

U.S. soybeans rallied for the first time in three sessions on Tuesday as port congestion in Brazil during the harvest of its bumper crop helped drive up cash prices in the United States.

But trading volume was light and corn lost ground as traders evened positions ahead of a U.S. government report on Thursday that's expected to forecast the largest corn seedings in 77 years.

Closely-watched oilseeds analyst Oil World cut its estimates for both the Brazilian and Argentine soy crops even as consultancy Agroconsult lifted its estimate for the Brazil crop.

Logistical problems keep supporting the market, said Futures International senior commodity analyst Terry Reilly.

"Thin trading is creating volatility and that's why we are seeing price swings like we are," said Reilly.

Trucks are lining up for more than 20 km to deliver freshly harvested soybeans at Santos, a top port in Brazil. The harvest of what is expected be a record crop in the world's No. 2 producer is roughly two-thirds complete but port shipping delays are as long as 65 days.

Cash prices for soybeans at the U.S. Gulf Coast, where the bulk of supplies from the world's largest producer and exporter are shipped, rose to the highest in nearly two weeks.

Soybeans for May delivery settled 10-1/2 cents higher at $14.47-3/4 per bushel (all figures US$).

Still, trading volume in soybeans has slipped, with volume down about 40 per cent on Monday from the same day last week at the Chicago Board of Trade (CBOT). Traders are squaring positions before the U.S. Department of Agriculture's annual plantings and quarterly grain stocks report, slated for release at midday Thursday.

Corn futures slid as much as one per cent, with the benchmark May contract ending three cents lower at $7.30-1/4 after earlier falling below its 200-day moving average.

CBOT May wheat gained 4-1/4 cents to $7.31-1/2 while benchmark hard red winter wheat futures climbed one per cent at the Kansas City Board of Trade.

Investment funds sold 5,000 corn contracts and bought 3,000 wheat and 4,000 soy contracts, sources on the Chicago trading floor said.

"This is just pre-report positioning. We are not going to see much movement one way or the other ahead of Thursday," said Christopher Narayanan, head of agriculture commodities research at Societe Generale in New York.

Bumper harvests in South America are helping to anchor prices, while cold weather and the potential of planting delays in the United States lent support to futures.

Analysts widely expect razor-thin global grain stockpiles to be replenished this year by increased plantings and weather more beneficial to crop development after last summer's worst U.S. drought in 50 years.

"We are bearish on the space," Narayanan said of agriculture futures. "The overall theme of the year is prices drifting downward."

Losses in the grains were capped by expectations that USDA will report the tightest U.S. corn stockpile in 15 years.

Below-normal temperatures damaged some of the young wheat plants coming out of dormancy in the southern U.S. Plains wheat belt.

The deep freeze in portions of Kansas, Oklahoma and Texas "was well within the parameters of damage," said Don Keeney, meteorologist for MDA Weather Services.

-- Michael Hirtzer reports on the grain and livestock markets for Reuters from Chicago. Additional reporting for Reuters by Sam Neslon in Chicago.


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