South America supply concerns drive soybeans to 6-1/2 year high

PARIS/SYDNEY: Chicago soybeans touched a 6-1/2-year peak as investors positioned for dry crop weather coupled with an Argentine labour strike curbing South American export supply.

Concern over dryness reducing the South American harvest's prospects also supported US corn, which hit a more than one-year high, while wheat ticked lower on Wednesday.

The most active soybean futures on the Chicago Board Of Trade were up 0.7% at $12.58-1/2 a bushel by 1142 GMT.

They earlier reached their highest since June 2014 at $12.61-1/2, after recovering from a slight fall.

Despite widespread showers in Brazil this month, traders were cautious about the effects of drought earlier in the season, while also monitoring persisting dryness in Argentina.

Aprosoja, an association of Brazilian grain growers, cut its forecast for the 2020/2021 soybean crop by 2 million tonnes to 127 million, citing dryness in Brazil's key producing states.

Stalled wage talks between Argentine workers and oilseed processors in a near two-week-old strike have hampered grain exports from the world's top soymeal supplier.

The strike also fuelled gains in vegetable oil markets, with Malaysian palm oil jumping over 3% in response to strength in soyoil.

The soybean market has been sensitive to any potential setback in South American supply as brisk demand has already absorbed much of the new US soybean crop.

China is expected to import more than 100 million tonnes of soybeans in 2020, a record high, state-owned grain trader COFCO said on Tuesday.

Grain markets will get an update on international demand in weekly US export sales data at 1330 GMT.

CBOT corn was up 0.5% at $4.45-3/4 a bushel, after earlier reaching its highest since July 2019 for a third session at $4.46.

Wheat was down 0.3% at $6.15 a bushel, after reaching a one-week high on Tuesday.

Wheat traders were also monitoring the strike in Argentina, which could affect shipments to Brazil.