US soybean prices soared on Wednesday as a two-week-old farm protest crippled exports from Argentina and switched some demand to the United States, helping the market recoup the steep losses of last week.
Argentina and Brazil typically dominate the soybean export market at this time of year when supplies in the United States are running low and farmers are gearing up to plant this year's crop that will be harvested in the fall. The United States is the world's top exporter of soybeans, which are crushed into soymeal for use as animal fodder, and soyoil, which is widely used in cooking. Increasing amounts are being used to produce biodiesel, a renewable fuel.
Brazil and Argentina are the second and third largest soybean exporters, respectively. "The big controversy in Argentina with the farmers strike and force majeure due to the strike set beans off today," said Jerry Gidel, analyst for North America Risk Management.
Agribusiness company Bunge Ltd, the world's largest processor of oilseeds like soybeans, said it had declared force majeure on shipments from Argentina. Force majeure is a contract provision that in this instance frees grain companies from liability if they fail to make a delivery because of circumstances beyond their control.
Grain traders said other major exporters such as Archer Daniels Midland Co, Cargill Inc and Louis Dreyfus Co also had declared force majeure. Officials from these companies were not available for comment. Argentine farmers have vowed to keep up protests until the government repeals a tax hike on grain exports aimed at tempering rising inflation and boosting state revenue.
The repercussions of the export shutdown were felt as far away as China, which needs about 2 million and 3 million tonnes of the oilseed each month for livestock and for cooking. China, the world's most populous nation and largest soybean importer, has been battling inflation, which was at a 12-year high. "The talk about force majeure limiting some shipments to China has driven the bean complex," said analyst Roy Huckabay of the Linn Group.
Chicago Board of Trade soybeans for May delivery ended 45 cents higher at $13.52 a bushel after rising the daily maximum of 50 cents. May soymeal rose $5.20 to $355.50 per ton. May soyoil rose 0.02 cent to 57.75 cents a lb. CBOT wheat futures fell sharply on selling by speculators and concerns that the grain was overprice in global markets.
There was pressure from news that Turkish state grains agency TMO had cancelled a tender to buy 250,000 tonnes of US milling wheat. A TMO official said the tender was scrapped due to "technical reasons" and that a new one would be issued.
CBOT corn futures closed higher amid a resumption of fund buying, and concerns over soggy weather in the US Midwest possibly delaying planting of this year's crop. The US Agriculture Department will issue its eagerly-awaited plantings intentions report on Monday that will be its first forecast of how many acres of corn, soybeans and wheat will be grown in the United States this spring. CBOT May wheat fell 34-1/2 cents to $10.33 a bushel. CBOT May corn rose 7-1/2 cents to $5.52-1/4.
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