What's driving bean rally?

Soybeans climbed for a second day in Chicago as a jump in U.S. exports added to supply concerns amid declining stockpiles and flooding in parts of the nation’s Midwest region that may curb yields.

U.S. shippers sold 317,200 metric tons of the oilseed (CBOT:ZLN14) for delivery before Aug. 31, the most since the last week of February, the Department of Agriculture said today. Total sales since Sept. 1 are up 24% from a year earlier, above the 20% increase forecast by USDA this year, agency data show.

“Exports sales were better than expected and that means tighter supplies before the harvest,” Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “People are speculating that too much rain may cut planted acreage and take the top end of U.S. soybean yields.”

Soybean (CBOT:ZSN14) futures for November delivery rose 1% to $12.4125 a bushel at 11:39 a.m. on the Chicago Board of Trade. Prices climbed 0.4% yesterday.

Flooding and excessive moisture may worsen in some fields west of the Mississippi River the next four days as showers return to the region, where as much as 12 inches (30.5 centimeters) of rain has fallen this month, World Weather Inc. said in a report today. For the rest of the area, warm, wet weather will aid crop development, the forecaster said.

U.S. soybean inventories on June 1 probably totaled 382 million bushels, the smallest for the date since 1977, according to a Bloomberg News survey. The U.S. Department of Agriculture is set to release its estimate June 30.

The USDA’s “quarterly report on U.S. inventory levels next Monday is also already casting its shadow,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, wrote in an e-mailed report.

Corn futures for December delivery on the CBOT advanced 1.2% to $4.4525 a bushel.

Wheat futures for delivery in September advanced 0.6% to $5.875 a bushel.

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