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Markets

Soybeans climb to highest since 2014 on South American crop worries

  • Large speculators cut their net long position in CBOT corn futures in the week to March 2, regulatory data released on Friday showed.
08 Mar 2021

SINGAPORE: Chicago soybean futures climbed on Monday to their highest in almost seven years as dry weather in Argentina and excessive rains in Brazil stoked supply concerns, while broad-based gains in world markets on US stimulus also buoyed sentiment.

Corn and wheat futures rose for a second consecutive session.

"Brazil's soybean harvest is being dogged, and a little depleted, by wet weather," said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia in Sydney. "Argentina's hot, dry weather outlook is threatening soybean crops."

The Chicago Board of Trade (CBOT) most-active soybean contract hit its highest since June 2014 at $14.60 a bushel. The market was up 1.5% at $14.51-3/4 a bushel, as of 0240 GMT.

Corn added 1.7% to $5.54-1/2 a bushel, while wheat rose 0.7% to $6.57-3/4 a bushel.

Concerns increased over crops in Argentina, the world's top soymeal exporter, after Commodity Weather Group said a rain deficit was seen "leading to severe yield loss" for 30% of the soy belt in the coming 10 days.

Weather firm Maxar said below-normal rains were forecast in Argentina over the next 15 days, stressing second-crop soybeans.

"February and March are perhaps the two most important months for Argentina's corn and soybeans to receive ample rainfall, though last month was unusually dry and this month could follow suit, according to the latest weather forecasts," Karen Braun, a market analyst for Reuters, wrote in a column.

"Yields in the No. 3 corn and soybean exporter are not projected to be great anyhow, though the poor timing of the latest dry spell could reduce potential even further."

Ukraine's 2021 spring grain sowing is likely to be postponed until next week because of wet fields and cold weather, Deputy Economy Minister Taras Vysotskiy said on Friday.

"Soybeans are poised to rise into $15.53-1/2 to $15.63-1/2 range," according to Wang Tao, a Reuters market analyst for commodities technicals.

The contract is riding on a powerful wave 3, which has cleared the resistances at $14.07-3/4 and $14.33-1/2.

February snowfalls covered almost all Ukrainian regions and a part of the country remains covered by snow now. Last year, southern Ukrainian regions started grain sowing on Feb. 25.

Some traders also adjusted positions ahead of the release of monthly US Department of Agriculture (USDA) crop forecasts on Tuesday. The agency is expected to further lower its estimates for 2020/21 ending stocks for soybeans and corn, according to a Reuters survey of analysts.

Large speculators cut their net long position in CBOT corn futures in the week to March 2, regulatory data released on Friday showed.

The Commodity Futures Trading Commission's weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, switched to a net long position in CBOT wheat and cut their net long position in soybeans.