Soybeans trade close to 5-month high on strong demand from China

Investing.com - Soybean futures eased down on Monday, but remained close to a five-month high as prices continued to draw support from increased demand prospects from top consumer China.

On the Chicago Mercantile Exchange, soybeans futures for March delivery traded at USD12.7825 a bushel during European morning trade, edging 0.17% higher.  

The March contract is due to expire at the end of trading on Wednesday, February 29. Contract expirations often lead to volatile sessions as market participants look to close out positions or readjust their portfolios.

Meanwhile, the more actively traded contract for May delivery eased down 0.1% to trade at USD12.7825 a bushel. It earlier rose by as much as 0.5% to trade at USD12.9238 a bushel, the highest since September 23.

Soy prices rose to the highest level since September after the U.S. Department of Agriculture said that U.S. farmers sold 4.03 million metric tons of the oilseed in the week ended February 16, above a range of trade estimates for 3.5 million to 3.9 million tonnes.

According to the export figures, China bought 521,100 tonnes for delivery in the 2011-12 marketing year and 2.8 million for delivery in 2012-13.    

The strong Chinese import numbers come after influential industry group Oil World said last week that China will import 14% more soybeans in the first three months of 2012 than a year earlier, due to declining domestic production and rising demand.

The Asian nation will import 12.5 million metric tons of soybeans from January through March this year. Last week, U.S. farmers sold 2.923 million metric tons of the oilseed to China in the biggest one-day deal on record.
 
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.

Speculation over worsening crop conditions in major South American soy-growers, Argentina and Brazil also provided support.

Argentina's biggest grains exchange on Friday trimmed its forecast for soy production by nearly 5 million tonnes from a previous forecast, as drought conditions damaged crops.

The Rosario Grains Exchange now expected Argentina’s soybean crop to total 44.5 million tonnes, down from the previous outlook for 49.5 million tonnes.

Traders have been focusing on weather conditions and crop prospects in South American countries in recent weeks.

South America is a major soybean exporter and competes with the U.S. for business on the global market. A downbeat crop outlook there could increase demand for U.S. supplies.

Elsewhere on the Chicago Mercantile Exchange, wheat for May delivery fell 0.65% to trade at USD6.3688 a bushel, while corn for May delivery declined 0.65% to trade at USD6.3913 a bushel.

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