Soybean advances to 34-year high in US

Soybeans extended gains to a 34-year high on speculation that rising global demand will result in smaller inventories for the oilseed next year than the government has predicted. Corn fell, while wheat rose to a two-month high.

The US Department of Agriculture next week probably will cut its forecast of soybean reserves on September 1 to 198 million bushels, according to a Bloomberg survey of 17 analysts, down from 210 million forecast in November.

The surplus was a record 573 million bushels before farmers harvested this year's crop, which was 19 per cent smaller than in 2006.

"The US government's estimates for global soybean inventories will likely to fall further from the last month's estimates after increased export sales, especially to China,'' Toshimitsu Kawanabe, an analyst at futures broker Taiheiyo Bussan in Tokyo, said by phone today.

Soybeans for January delivery on the Chicago Board of Trade rose as much as 5.75 cents, or 0.5 per cent, to $11.255 a bushel, the highest since July 1973, and stood at $11.24 in after-hours electronic trading on the Chicago Board of Trade at 3:00 pm Singapore time.

The contract gained 1.9 per cent on December 7 on speculation that the dry weather threatening young plants in Argentina will spread to Brazil. Futures have risen 68 per cent in the past year after US farmers planted the smallest acreage in 12 years to sow the most corn since 1944.

The USDA is due to release its monthly supply and demand estimates for soybeans and grains at 9:30 am Washington time tomorrow.

China soybean
In China, soybean futures rose to the highest in two weeks on expectation that rising prices of the oilseed imported from the US, the biggest exporter, may increase China's import costs.

China may sell soybean oil imported by the state reserves to control rising food prices, the China National Grain and Oils Information Center said today.

"The planned sale, which some say may be 400,000 tonnes, is not enough, especially when global prices are trending higher,'' said Dong Shuangwei, an analyst at Beijing Capital Futures Co. "The market is increasingly bullish again.''

Soybeans for September delivery, the most active contract on the Dalian Commodity Exchange, gained as much as 2.5 per cent to 4,457 yuan ($603), and settled at 4,422 yuan.

Corn for March delivery on the Chicago exchange was 0.75 cent lower at $4.165 a bushel at 3:01 pm Singapore time. The contract rose 1.3 per cent on December 7 after rising to $4.18 a bushel, the highest since June 19.

'Record Prices'
Wheat for March delivery advanced 18 cents, or 2 per cent, to $9.395 a bushel, the highest since October 4, and traded at $9.39 at 3:02 pm Singapore time. The contract gained the exchange limit of 30 cents, or 3.4 per cent, on December 7 after Canada, the second-largest exporter, cut its output estimate amid dwindling global inventories.

Average wheat prices will rise to a record next year even as farmers increase planting, US Department of Agriculture Undersecretary Mark Keenum said on December 7 in Tokyo.

"We're going to see very strong prices for the coming year,'' Keenum said in Tokyo. "A record level of prices, that's what we are projecting at USDA for wheat in the coming season.''

About 297 million bushels of unsold US wheat will be on hand as of May 31, the analysts said, down from 312 million forecast by the USDA last month and down from inventories of 456 million on May 31 of this year.

India's State Trading Corp called bids to import 350,000 tonnes of wheat by December 17 as part of plans by the world's second-biggest user of the grain to replenish reserves, according to a document posted on the company's Web site today.