Forexpros – Soybean futures were up for a second day during European morning trade on Wednesday, rallying to the highest level in almost four years as ongoing concerns over drought-stricken crops in Brazil and Argentina continued to fuel speculation of export demand shifting from South America to the U.S.
On the Chicago Mercantile Exchange, soybeans futures for July delivery traded at USD14.8963 a bushel during European morning trade, rallying 1.65%.
It earlier rose by as much as 1.75% to trade at USD14.9025 a bushel, the highest since July 18, 2008.
Soybean prices have rallied nearly 19% since the beginning of February, as market sentiment has been dominated by concerns over distressed crops in major South American soy growers and on hopes demand from top consumer China will remain robust in the near-term.
Concerns over Argentina’s soybean crop intensified after influential industry research group Oil World cut its forecast for the nation’s 2012 crop because of drought damage.
The German-based industry group expects Argentina’s soy crop total 42.5 million tonnes, down from 49.2 million in 2011, saying the deteriorating harvest outlook is likely to support global soybean prices.
The downgrade came after Argentina’s Agriculture Ministry cut its official estimate for this year’s soy crop last week to 42.9 million tonnes, compared to the latest USDA estimate of 45 million tonnes.
The series of downward revisions fuelled speculation the USDA will slash its own estimates on the country’s soy output in its next supply-and-demand report due in early May.
Argentina is a major soy exporter and competes with the U.S. for business on the global market. A downbeat Argentinean crop outlook could increase demand for U.S. supplies.
Meanwhile, expectations of strong demand from China lent further support.
The U.S. Department of Agriculture said last week that U.S. farmers sold 1.219 million tonnes of soybeans, the highest in five weeks, in a time when South America bears the brunt of the export load.
China is the world’s largest soybean consumer and is expected to account for nearly 60% of global trade of the grain in the 2011-12 season, according to the USDA.
Some traders also noted a flurry of technical buying once prices broke above a key resistance level close to USD14.56 on Tuesday.
Elsewhere on the Chicago Mercantile Exchange, wheat for July delivery rose 0.9% to trade at USD6.3863 a bushel, while corn for July delivery added 0.45% to trade at USD6.1088 a bushel.
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