Soybeans Rise as China May Allow Yuan Gain, Boosting Imports

Soybeans rose to a one-week high on speculation that China, the world’s biggest oilseed importer, will allow its currency to rise against the dollar in a move that would cut the cost of purchasing supplies from the U.S.

The Chinese yuan is trading near its highest level in 11 weeks on speculation the government will allow the yuan to appreciate to limit the rate of inflation, which reached a 16- month high in February. U.S. Treasury Secretary Timothy F. Geithner will meet Chinese Vice Premier Wang Qishan tomorrow in Beijing.

“There’s some buying tied to speculation China will allow its currency to rise against the dollar and boost U.S. exports,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis.

Soybean futures for May delivery rose 4.24 cents, or 0.4 percent, to $9.4875 a bushel at 12 p.m. on the Chicago Board of Trade, after earlier touching $9.495, the highest price since March 31. Before today, the most-active futures fell 9.9 percent this year as rains improved prospects for record crops in Brazil and Argentina.

Oilseed processors in China bought about 15 cargoes of soybeans last week as profit margins increased, according to three industry executives with knowledge of the trade.

About half the cargoes are from Latin America for shipment between May 1 and Sept. 30, and the remainder are from U.S. crops that will be harvested later this year, the executives said. Orders averaged three to five cargoes a week in March, one of the executives said.
Soybean Imports

China may increase soybean imports by 3.4 percent to 42.5 million metric tons in the marketing year that ends Sept. 30, the U.S. Department of Agriculture said last month. Imports have more than doubled in the past six years to meet domestic demand for animal feed and vegetable oil, USDA data show.

The profit from processing imported soybeans has risen to more than 200 yuan ($29) a ton after domestic soybean-oil prices gained and the cost of beans from overseas fell, the China National Grain and Oils Information Center said today. The Asian country buys more than half of the global soybean exports.

The soybean crop in the U.S. was valued at $31.8 billion last year, second only to corn, government figures show.

Jeff Wilson
Source: Bloomberg