Soybean Prices Head for Weekly Gain on China-Demand Prospects

Soybeans were little changed, heading for the biggest weekly jump in two months on speculation that China will increase purchases of U.S. soybean oil after curbing imports from Argentina in a trade dispute.

China, the world’s biggest consumer of soybeans, plans to increase imports of U.S. and Canadian soybean oil after blocking shipments from Argentina, Wagner Rossi, Brazil’s agriculture minister, said yesterday. Purchases by the Asian nation may jump to a record 5.5 million metric tons next month after 4.3 million tons were imported in April, the China National Grain and Oils Information Center said this week.

“The rising import demand from China continues to provide a bullish impact on market psychology,” said Anne Frick, a vice president of research for Prudential Bache Commodities LLC in New York. “The increased demand will tighten U.S. supplies.”

Soybean futures for July delivery fell 0.75 cent to $9.9225 a bushel at 11:59 a.m. on the Chicago Board of Trade, after earlier rising to $9.99, the highest level for a most-active contract since Jan. 12. The price is up 4.2 percent this week, which would be the biggest weekly gain since Feb. 12.

U.S. soybean reserves on Aug. 31, before the harvest, will reach 190 million bushels (5.159 million tons), the U.S. Department of Agriculture said this month. Stockpiles fell to 138 million bushels a year earlier, the second-lowest since 1977.

“Increased U.S. exports may reduce the U.S. carryover to 153 million bushels,” Frick said. “That’s a tight supply situation.”

Soybeans are the second-biggest U.S. crop, behind corn, with a 2009 value of $31.8 billion, government figures show. The U.S. is the world’s biggest producer and exporter, followed by Brazil and Argentina.

Jeff Wilson
Source: Bloomberg