US soybeans rallied for the seventh session on Tuesday, notching a five-month high on expectations that shrinking supplies in South America will boost demand for US exports, especially from top buyer China. Funds kept plowing money into soybeans, boosting futures enough to encourage US farmers to plant more acres of that crop this spring to meet demand.
The premium for Chicago Board of Trade November soybeans over December corn - the first contracts to fully reflect prices for this year's harvest - was the widest in nearly a year. Current prices put new-crop soybeans at 2.3 times the value of corn, while a ratio of 2.4:1 was a "jump ball" on the value of each crop, said Don Roose, analyst at US Commodities in West Des Moines, Iowa. "It's an acreage battle. It's most definitely helping to buy soybean acres," Roose said. "We continue to have fund buying under the market and China is lurking in the background every day." Global soybean production was set to decline a record 19 million tonnes, largely due to poor growing conditions in key growing regions of South America, closely watched oilseed analyst Oil World forecast on Tuesday.
Smaller crops in No 2 soybean exporter Brazil and No 3 Argentina should push business to No 1 shipper, the United States, leading US farmers to plant more soybeans in the coming weeks. Funds have increasingly bought into the market. Commodity funds have not been net sellers of soybeans since February 9, trade sources said. China, which imports roughly two-thirds of the world's soybeans, last week bought the second-largest purchase ever of US soybeans.
Soybean futures have rallied 12 out of the last 13 sessions, with CBOT March soybeans up 7 cents at $13.01 per bushel, the highest level since September 22 on a continuous chart. CBOT March corn edged 1-1/4 cent higher at $6.45-3/4 per bushel, bolstered by surging soybeans, but gains were limited by ideas of US farmers planting the largest corn area since 1944. Grain and oilseed futures were underpinned by supportive outside markets, with the dollar losing ground against the euro following an injection of cash from the European Central Bank. CBOT March wheat rose 1.1 percent, or 6-3/4 cents.
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