Soybeans en route to a best week in four years

Soybeans continued to gain for a sixth straight week, the longest such streak in four years, amid increased demand, which drained inventories of last years crop.

On the Chicago Mercantile Exchange, soybeans futures for July delivery gained 0.55% on the day and traded at $15.3638 a bushel at 10:17 GMT.

According to the U.S. Department of Agriculture, soybeans inventories in the U.S. will drop 26% to 125 million bushels before this years harvest. This is the lowest level since nine years. U.S. exporters have already sold 36.62 million metric tons of the 36.74 government prediction. The USDA said in its weekly crop progress report that 57% of the nation’s crop was planted as of June 2. This is 13% higher than last week, but still significantly below the five-year average of 74%. As of June 2 2012, 93% of the soybeans crop was planted.

Tetsu Emori, a commodity fund manager at Astmax Asset Management Inc. said for Bloomberg: “Supply of old-crop soybeans is quite tight. People are waiting for much higher prices. There’s no reason to sell for now.”

Elsewhere on the market, wheat futures for July delivery showed a minor increase and traded 0.09% higher at $6.98 a bushel at 10:29 GMT. Still, the grain lost around 1.3% this week as favorable crop developing conditions in the Black Sea region suggested increased supply. Wheat prices were also pressured by reduced demand for U.S. wheat after the USDA reported an unauthorized genetically modified strain was found in Oregon. This caused Japan, South Korea and Mexico to cancel orders, resulting in a 33 200 tons export reduction in the week ending May 30.

According to USDA’s report on Monday, 73% of the winter wheat crop was planted as of the week ending June 2, compared to 60% in the preceding week, which shows a stable advance. However, this is still lower than the 80% five-year average and the 88% planted during the same week last year. Winter wheat condition is also worse than last year. The USDA reported 42% of the crop falls in the “very poor” and “poor” categories, 31% is “good” and “excellent” and 25 has a “fair” quality. Last year 18% was categorized as “very poor” and “poor”, 30% as “fair” and 52% was “good” and “excellent”.

Meanwhile, corn July futures traded at $6.6225 a bushel at 10:31 GMT, down 0.02% on the day. Corn plunged during the week as global supply is expected to be at a record level, even though unfavorable weather conditions reduced areas sown to corn in the U.S. The USDA said on May 10 the U.S. will harvest a record 359.2 million tons this year even though the area sown to corn may 93.5 million acres, 3.9% less than forecast in March. That would still leave production 23% higher than last year’s reduced to drought crop, said Morgan Stanley on June 3.

Ilya Shestakov, Deputy Minister of Agriculture of the Russian Federation said Russia’s total grain harvest may surge to 95 million metric tons this season, significantly above the 70.9 million tons a year earlier.