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Wheat, Soybean Futures Rebound on Argentine Supply Concerns
Bloomberg
July 01, 2009

By Luzi Ann Javier and Jae Hur

July 1 (Bloomberg) -- Wheat futures rebounded from the lowest in six months and soybean futures gained in Chicago on concern a decline in output in South America may offset forecast gains in U.S. harvests.

Wheat futures slumped yesterday and soybean futures fell after the U.S. Department of Agriculture raised its estimates for U.S. crop plantings from its forecast in March. Argentina's wheat output may equal domestic demand this year Eduardo Anchubidart, an economist at the Buenos Aires Cereals Exchange said June 29, prompting speculation it may end exports.

Lower output in Argentina "is still a concern," said Ben Barber, a commodities broker at Bell Commodities Ltd. in Melbourne. Still, "it's just a bit of a bounce back," as expectations of a bigger U.S. harvest pushed concerns that Argentina may cease exports to the background, causing a "massive fall in those commodities overnight."

Wheat for July delivery gained as much as 1.1 percent to $5.17 a bushel in after-hours electronic trading on the Chicago Board of Trade and was at $5.135 by 2:15 p.m. in Singapore. It lost as much as 6.2 percent to $4.9575 a bushel yesterday, the lowest since Dec. 12. Wheat for September delivery, the most active contract, gained as much as 1.2 percent to $5.47 a bushel before trading at $5.44.

Soybeans for November delivery, after the U.S. harvest, gained as much as 2 percent to $10.01 a bushel. The contract was at $10.00 a bushel at 2:18 p.m. Singapore time.

Estimate Increased

The USDA yesterday raised its estimate for areas planted to soybeans to 77.483 million acres this year, the biggest ever. That compares with an estimate of 76.024 million acres in March, and 75.718 million acres last year. Analysts surveyed by Bloomberg News had expected 78.16 million acres.

Estimates on areas planted with spring wheat were also raised to about 13.772 million acres, the USDA said. That topped the 13 million projected by analysts surveyed by Bloomberg News last week. Total inventories on June 1 were 667 million bushels, more than double from a year earlier.

Argentina, the world's fourth-largest wheat exporter last year, may cease shipments of the grain for the first time in at least a century as drought curbs plantings.

Wheat production may equal the amount consumed by Argentina's millers as continued dry weather until September is forecast to cut harvests in the 2009-2010 season by 28 percent to 6 million tons from the previous season, the Buenos Aires Cereals Exchange's Anchubidart said.

December-delivery corn fell for a third day, losing as much as 0.8 percent to $3.6425 a bushel, the lowest since March 12. It last traded at $3.6675 by 2:18 p.m. Singapore time.

The USDA yesterday raised its estimate for areas planted to corn by 2.4 percent from its March forecast to 87.035 million acres, the second biggest since 1947.

The impact of "increased acreage in corn in the USDA report overnight, is spilling over into wheat," Bell's Barber said. "That's taking the front seat."

In the export market, Egypt is seeking at least 55,000 tons of wheat in a tender today. Japan plans to buy 108,000 tons of the grain tomorrow, including 87,000 tons from the U.S, and Taiwan is seeking 82,350 tons of wheat in a tender.

South Korea bought 55,000 tons of feed wheat through private negotiations yesterday, according to two industry executives familiar with the trade.

To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net

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