Soybeans gain as U.S. supply shrinks

Soybeans for July delivery traded at $15.08, up 0,78% on the day. The grain is headed for its best month since July as steady demand from China dries up U.S. stockpiles. This is a fifth straight week of gain. Prices surged 7.7% in May as the worst drought in the U.S. since 1930 hit last July and eroded production.

Paul Deane, an agricultural economist at Australia & New Zealand Banking Group Ltd. in Melbourne commented for Bloomberg: “It already will be very tight running through to the new crop, but if export sales were to continue at the recent pace, then it will get incredibly tight.”

Prices gained following delayed crop planting in the U.S. due to unsuitable weather conditions. As of the week ending May 19 only 24% of the U.S. soy crop was planted, way below the 71% planted the same period last year. This, coupled with a 19% increase of Chinese imports in April and May caused soybeans to surge. According to the U.S. Department of Agrictulures estimates, soybeans reserves will drop to 125 million bushels, the lowest level since 2004.

Corn futures for July delivery traded at $6.58, up 0,46% on the day. Corn reached a three-week high on Monday as a report by the U.S. Department of Agriculture showed corn crop planting was slowed down due to excessive rains. Parts of Iowa, Missouri, Illinois and South Dakota had 15 centimeters of rain. Nevertheless, farmers made good progress last week.

Wheat futures for July delivery dropped 0.55% on the day and traded at $6,9475 a bushel at 9:49 GMT., following a 2,2% drop yesterday. Prices dropped after Japan suspended U.S. imports after the government discovered a genetically modified and unapproved strain growing in Oregon. The Asian nation also cancelled a 24 926 metric tons purchase of white wheat.

Earlier in the week wheat prices were experiencing downward pressure by favorable conditions for crop developing. Rains in central and eastern areas of the U.S. and in western Australia recharged soil moisture, which would lead to higher supply. Last week’s rains in the Black Sea region improved wheat conditions and Ukraine is expected to contribute to the global wheat supply with a 19,3 million metric tons output, up 22% compared to last year’s 15.8 million metric tons production.