US soyabean futures rebounded from a 4-1/2-month low on Tuesday as bargain buying snapped a four-session slide that nearly erased gains from this summer's crippling drought. Before recovering, soyabeans during the trading session had lost more than 6 percent since the US Department of Agriculture on Friday raised its US harvest estimate more than expected and increased its outlook for global inventories.
The sharp drop in prices drew buyers back to the market, traders said. Corn, which had been feeling spillover pressure from losses in soyabeans, also eked out gains. "For right now we've gone down far enough to find a little support," said Rich Nelson, chief strategist for Allendale.
January soyabeans, the most actively traded contract, rose 0.2 percent to $14.08 a bushel at the Chicago Board of Trade. Before rising in late trading, the contract fell below $14 for the first time since June 28. Nearby November soyabeans ended up 1.1 percent at $14.27 a bushel. Commodity funds bought an estimated 6,000 soyabean and 5,000 corn contracts at the CBOT, traders said. They sold an estimated 3,000 contracts of wheat, which ended lower.
Firm cash markets helped support late gains in soya, traders noted. Soyabean futures began a rally linked to the worst US drought in more than 50 years on June 15 at $13.86 per bushel and hit a record high of $17.94-3/4 on September 4 as fears of dwindling supplies peaked.
Friday's USDA report indicated that "the worst is over" for crop losses, said Tim Hannagan, a grain specialist for Alpari. He added that soya prices could resume their slide due to easing concerns about tight supplies, particularly if favourable weather promotes crop production in South America. December corn on Tuesday gained 0.8 percent to $7.23-1/2 a bushel, while December wheat slipped 0.8 percent to $8.51 a bushel. Technical signals indicate it will be difficult for soyabeans to sustain a recovery, as the market fell below its 200-day moving average on Monday, according to analysts.
"The charts for corn, soyabeans and wheat are all negative," said Joseph Vaclavik, president of Standard Grain. Grain traders are eyeing demand after the USDA provided a clearer view on crop supplies in Friday's report. Germany's Commerzbank said in a daily note that "the much-reduced price level is likely to lure Chinese buyers back" to the soyabean market, although there was no confirmation of new business. China is the world's top soyabean importer. USDA's export inspections of soyabeans for the week that ended on Thursday reached 64.1 million bushels, topping trade expectations for 53 million to 59 million bushels.