Soybeans Advance to 11-Month High as China Demand Seen Rising

May 22, 2014 3:21 pm ET

May 22 (Bloomberg) -- Soybeans climbed to the highest in more than 11 months in Chicago on speculation that demand for livestock feed will increase in China, the biggest consumer of the oilseed. Corn also gained, while wheat fell.

Chinese processors last week ordered about 600,000 metric tons of soybeans for shipment after Sept. 1, according to a Bloomberg News survey. Since April 1, Chinese egg prices surged 26 percent while hogs increased 20 percent, according to data from Shanghai JC Intelligence Co. Last month, an industry group said China was at risk of defaulting on some soybean imports after bird flu and slumping pork prices curbed meal demand.

“Stronger Chinese meat prices are boosting feed demand,” Peter Meyer, the senior director of agricultural commodities for Pira Energy Group in New York, said in a telephone interview. “China will do what it needs to do to maintain food security.”

Soybean futures for July delivery rose 0.9 percent to close at $15.1875 a bushel at 1:15 p.m. on the Chicago Board of Trade, the global benchmark. Earlier, the price reached $15.3675, the highest for a most-active contract since June 5.

Futures have gained 18 percent this year. U.S. inventories as a percentage of use and exports are forecast to fall to the lowest since before 1964.

U.S. exporters sold 120,000 tons of soybeans for delivery after Sept. 1, the U.S. Department of Agriculture reported today. Weekly sales for delivery before Sept. 1 doubled to 164,435 tons from a week ago, boosting total commitments 3 percent above the USDA’s forecast for the season, the agency said in a separate report.

Soybean-meal futures on China’s Dalian Commodity Exchange jumped 2.1 percent today and touched the highest price since October 2012, adding to speculation that the country will continue to increase imports, Pira’s Meyer said.

Corn futures for July delivery rose 0.5 percent to $4.7675 a bushel in Chicago, capping the first two-day advance since May 6.

Wheat for July delivery fell 0.8 percent to $6.5925 a bushel, after touching $6.54, the lowest since March 12.

--With assistance from Ranjeetha Pakiam in Kuala Lumpur and Whitney McFerron in London.