US soyabeans rose for the second straight session on Friday, and were poised for the largest two-day rally since May, due to worries over the size of the crop, a day after the government made a surprisingly large cut in its production forecast. Wheat futures climbed for the fifth straight day on the back of a weaker US dollar and higher equities, while corn was firm after opening lower.
Futures were thinly trading in a narrow range, with some traders consolidating positions at the end of a volatile week at the Chicago Board of Trade. "You are getting a little lift from the outside markets but you are not seeing a lot of buying," PFG Best analyst Tim Hannagan said.
Agriculture markets are fundamentally on a bullish trajectory due to tight supplies and expectations of smaller yields. However, plunging equities during the past three weeks have traders wary of taking on risk ahead of the weekend. "The downside is very limited today but they are cautious about getting in too heavy in case Monday brings another debacle," Hannagan said.
By 12:22 pm CDT (1722 GMT), CBOT November soyabeans were up 8-3/4 cents to $13.40-1/2 per bushel while CBOT September corn rose 1-1/2 cents to $7.04. Corn was poised to rise 1.5 percent for the week and soyabeans about 0.3 percent. CBOT September wheat was 10-1/2 cents higher at $7.11-3/4 per bushel, a gain of 1.5 percent and wheat was poised for its largest weekly bounce in a month.
"Guys are worried about yields coming down. You have to be aware of that but I'm not sure that you go and chase it," said Roy Huckabay, analyst at The Linn Group in Chicago. "If the break comes, they're going to buy back into it. If it doesn't, they are going to pay up," Huckabay said.
The US Agriculture Department, in its first survey-based crop production forecast on Thursday, slashed estimates for the harvest of each crop, pegging the soyabean haul at 3.056 billion bushels, which was below the lowest trade guess. "My sense is that the market should be nervous about the supplies until we know more about the US crop size," said Anne Frick, oilseeds analyst at Jefferies Bache in New York. "Quite frankly, we're looking, on a world basis, (soyabean) production being less than consumption," she added. "If those numbers are accurate, we will need to ration usage."
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