Soybeans Rally to Two-Week High After China Shifts Yuan Policy

Soybeans rose to the highest level in more than two weeks on speculation that China will boost imports of U.S. crops after ending the yuan’s linkage to the dollar.

The People’s Bank of China said June 19 it will relax the fixed rate of 6.83 yuan to the dollar because the nation’s economic recovery has become “cemented” after the global financial crisis. U.S. exporters sold 120,000 metric tons of soybeans to China for delivery before Aug. 31, the U.S. Department of Agriculture said today in a statement.

“Chances are better for us getting our stuff into China,” said Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas. “They might not follow through, but that was some positive news.”

Soybean futures for November delivery rose 8.5 cents, or 0.9 percent, to $9.39 a bushel on the Chicago Board of Trade, gaining for the fourth straight session. Earlier, the price touched $9.4725, the highest level for the most-active contract since June 4. Futures gained 2.3 percent last week, partly as wet weather delayed seeding of the U.S. crop.

The price also gained on speculation that some acres will be left fallow as excessive rainfall keeps farmers out of fields. Parts of Iowa and Illinois, the biggest U.S. growers of soybeans, have received six times the normal rainfall in the past week, National Weather Service data show.

Soybeans are the second-biggest U.S. crop, valued last year at $31.8 billion, behind corn at $48.6 billion, government figures show.

Tony Dreibus
Bloomberg