Soybeans Rise on Increased Chinese Demand for U.S. Inventories

Soybeans rose to a three-month high on signs that demand is increasing in China, the world’s biggest importer. Export sales by the U.S., the world’s largest grower and shipper, rose 6.1 percent to 1.35 million metric tons in the week ended Nov. 12, including more than 724,700 tons to China, U.S. Department of Agriculture data show. Sales in the first two weeks of November were twice the October weekly average.

“China just keeps buying week after week, reducing U.S. supplies for other buyers,” said Alan Kluis, the president of Northland Commodities LLC in Minneapolis. “The growing economy and expansion of the livestock herds are boosting demand” for oilseeds to make animal feed, Kluis said.

Soybean futures for January delivery rose 7 cents, or 0.7 percent, to $10.46 a bushel on the Chicago Board of Trade. Earlier, the price reached $10.50, the highest level for a most- active contract since Aug. 13. Soybeans gained 6 percent this week, the most in six weeks.

Chinese demand is rising because of a surge in hog production, Kluis said.

Pork output in 2010 may total 50.3 million metric tons, up from 48.5 million tons this year, the USDA said last month. China’s hog herd may total 485 million head, up 4.8 percent, the agency has said.

‘More Feed Demand’

“China’s hog herd is five times larger than the U.S. and that means more feed demand,” Kluis said

U.S. soybean processors, including Bunge Ltd., used 155.3 million bushels in October to make animal feed and vegetable oil, up 8.3 percent from a year earlier, the National Oilseed Processors Association said on Nov. 16. The rate was the second- highest since 1996, the data show.

Soybean crushers are making an estimated $1.35 on each bushel converted to 48 pounds (22 kilograms) of animal feed and 11 pounds of soybean oil, USDA data show. A year earlier, the profit margin was 63 cents.

“The soybean-crush report was a big surprise,” Kluis said. “Profits are very good, and there is rising demand for the products.”

Soybeans, the second-biggest U.S. crop, were valued last year at $27.4 billion, government figures show. Corn was the largest at $47.4 billion.

By Jeff Wilson
Bloomberg