US soybean prices up on crop damage fears

Soybeans rose, capping the biggest weekly gain since mid-July, on concern that US crops will be damaged by a freeze in the northern Midwest.

Temperatures may fall as low as 27 degrees Fahrenheit (minus 2.8 degrees Celsius) overnight in all of Minnesota, the eastern third of Iowa and the western two-thirds of Wisconsin, with some freezing from Nebraska to Indiana, said John Dee, president of Global Weather Monitoring in Mohawk, Michigan.

"The market considers beans to be vulnerable to crop damage from an early frost,'' said Dave Marshall, an independent consultant to farmers and grain elevators in Nashville, Illinois. When temperatures fall below 30 degrees, immature beans shrivel, reducing the vegetable oil content and yield.

Soybeans for November delivery rose 13.5 cents, or 1.4 per cent, to $9.5475 a bushel on the Chicago Board of Trade. Prices rose 5.5 per cent this week, the largest gain since the week ended July 13. Prices, which have risen 75 per cent in the past year, reached a three-year high of $9.5975 on September 12.

US farmers will harvest 2.618 billion bushels of the oilseed this year, less than the 2.625 billion forecast in August, the government said on September 12, as record-high US temperatures in August reduced yields. Production is forecast to fall 18 per cent, after farmers cut planted acreage 15 per cent to sow more corn.

A few areas of the northern Midwest may fall to 28 degrees Fahrenheit tonight with most areas north of a line from Des Moines, Iowa, to South Bend, Indiana, likely to remain above freezing, said Mike Palmerino, senior agricultural forecaster for Meteorlogix in Woburn, Massachusetts. Freezing temperatures would be about three weeks early, Palmerino said.

"It won't be a widespread freeze event because the days are still longer than the nights for another two weeks,'' keeping soils warmer and slowing overnight cooling, he said.

Yields will average 41.4 bushels an acre this year, down from 41.5 forecast a month ago and 42.7 last year, the US Department of Agriculture said. Yields were cut in nine of the top 29 producing states, including Illinois and Indiana, which are in the top four.

"Bean strength is tied to perceptions the USDA overstated this year's crop,'' said Marty Foreman, an analyst for Doane Agricultural Services in St Louis. "Soybean yields may be disappointing with the heat in August.''

Prices also rose on speculation they aren't high enough to spur Brazil's farmers to plant enough soybeans to make up for the drop in US production, said Don Roose, president of US Commodities in West Des Moines, Iowa.

Brazilian farmers may increase soybean plantings for the crop year that starts next month by 6.5 per cent to 22 million hectares (54 million acres), Florianopolis, Brazil-based Agroconsult said today in a statement.

"It will take at least $10 soybeans to get more acres planted in Brazil,'' Roose said.

"The market is rising to encourage a larger shift in soybean production in South America.''