Soybeans set for 4th week of gains

AMSTERDAM: US soybeans rose for a second straight session on Friday, on tight supplies and strong demand from China, setting the contract on track for a fourth consecutive week of gains.

Wheat rose 0.64 percent, recouping some of Thursday's losses on expectations of tight global supplies as the US crop suffers from a drought, while corn ticked higher.

Investors in the agricultural markets are closely watching the adverse weather in South America which has lifted prices the last few weeks. Overly wet conditions have stalled the early harvest in Brazil and persistently dry weather has threatened corn and soybean crops in neighbouring Argentina.

Erin FtizPatrick, Rabobank's analyst, said forecast rains will relieve the market in short term, but long-term weather outlook that foresees dry weather will keep the pressure on prices.

"Plus there are logistical issues in Brazil," she said. "I don't see any pull back in demand from China. That demand will be supportive for the market."

China, the world's top soybean buyer, is expected to import more than 15 million tonnes of soybeans in the second quarter, up 36 percent from its estimated purchases in the January to March period, but port congestion in Brazil could delay shipments.

A slowdown in supplies from South America could force China to book more cargoes from the United States, further tightening US stocks and pushing up prices.

The US Department of Agriculture on Thursday reported stronger-than-expected export sales last week and confirmed a large US soybean sale to China for delivery in the 2013/14 marketing year, the third big sales confirmation this week.

Chicago Board of Trade March soybeans rose 0.82 percent to $14.80-1/2 a bushel by 1127 GMT, while March corn added 0.44 percent to $7.43-3/4 a bushel. March wheat gained 0.61 percent to $7.84-1/4 a bushel.

SLOWDOWN IN WHEAT DEMAND

For the week, March soybean are up 2.7 percent, the market's fourth week of gains, while corn has gained 3 percent, rising for three out of four sessions. Wheat is nearly one percent higher following losses last week.

Wheat prices rose but gains were capped by slowing demand for US wheat supplies.

"We had confirmation last night that physical buyers did not chase the rally in the futures market," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.

US wheat export sales of 293,600 tonnes for the 2012/2013 marketing year were down 49 percent from the previous week and 32 percent from the prior 4-week average.

Traders are anxiously awaiting possible news of Russian cancellation of wheat import duties in face of record high wheat and flour crisis there, FCStone said in a daily report.

Russia's agriculture and economy ministries voiced support on Thursday for a proposal to remove a 5 percent import duty on grain, which could help cool soaring domestic grain prices following a severe drought.

Corn export demand remained sluggish. USDA reported sales last week that were only about a quarter of the sales in the same week last year.

India's rising wheat export could add pressure on the market although shipments will be limited by infrastructure bottlenecks in the South Asian country.

India is considering allowing additional wheat exports to cut huge stocks at government warehouses and make room for the new season's harvest, Food Minister K. V. Thomas said.

After lifting a four-year-old ban on wheat exports by private traders in 2011, the government approved 4.5 million tonnes of exports from its overflowing warehouses last year, and more than 2 million tonnes of this total has yet to be shipped.

Commodity funds bought a net 5,000 CBOT corn contracts on Thursday, trade sources said. They sold 4,000 wheat and sold 4,000 soybean contracts.