CHICAGO (Dow Jones)--U.S. soybean futures rallied Monday, settling at their highest levels in nearly six weeks, as the market bounced on worries about Argentina's crop weather.
The Chicago Board of Trade January soybean future ended 16 1/2 cents or 1.3% higher at $13.15 1/4 a bushel, and the March futures, the most active contract, settled up 16 1/2 cents or 1.3% at $13.27.
The market still has a lot of questions about South American production amid forecasts for hot, dry conditions to continue in Argentine soy areas this week, said Mike Zuzolo, president Global Commodity Analytics and Consulting in Lafayette, Ind.
Argentina is the world's third-largest producer of soybeans behind the U.S. and Brazil, and is counted on to relieve the strain on U.S. supplies amid strong global demand.
Traders added risk premium to prices, as any threat to global production outlooks attracts buying on the risk production and supplies won't keep up with robust world demand. Speculative fund buying was estimated at 8,000 lots, traders said.
Private forecasters have begun to slash their forecasts for Argentina
production, with the Oil World newsletter out Friday, cutting their forecast for Argentina to 47 million metric tons.
The T-storm Weather LLC forecast said above-average heat affects Argentina for much of the next 7-10 days. While mostly dry weather should occur, there is a small chance for thunderstorms from Wednesday night through Thursday from east-central Cordoba through central/northern Santa Fe and Entre Rios, T-storm forecasts.
South American crops still have time to improve, but the crop is approaching the need for ideal weather to achieve the large crop potential counted on to offset strong demand, Zuzolo said.
Meanwhile, the market garnered residual strength from the need to maintain or secure additional planted acres in 2011, as current private forecasts reiterate the market will find a hard time building on tight supply forecasts from this year in the next marketing year, Zuzolo said.
Soybeans compete with other crops, including corn and cotton, for farmland, with all the markets trying to increase prices to encourage plantings.
Strong export demand reflected by solid weekly export inspections added some demand support to buoy prices as well.
SOY PRODUCTS
Soy product futures rallied along with soybeans. Soyoil futures climbed
Monday, recouping some value in the crush spread on strong global vegoil demand and spillover support from crude oil prices, analysts said. Soymeal was buoyed by strength in soybeans and supportive feed outlooks amid cold, snowy central U.S. weather conditions, analysts said.
CBOT January soyoil ended 0.85 cent or 1.6% higher at 54.98 cents per pound, and January soymeal traded $3.70 or 1.1% higher at $351.50 a short ton. Jan oil share was 43.94%, while the Jan soybean crush margin ended at 62 3/4 cents.
