Soybean Prices Rise as U.S. Export Sales to China Increase

April 21 (Bloomberg) -- Soybean prices rose for the first time in three sessions on signs of surging U.S. shipments to China, the biggest global buyer of the oilseed.

U.S. exporters reported sales of 180,000 metric tons to China for delivery before Aug. 31, the Department of Agriculture said today. Yesterday, the agency confirmed sales of 110,000 tons to China, and an additional 120,000 tons were sold for delivery after Sept. 1 to unknown destinations. U.S. inventories on Aug. 31 will fall to a five-year low, the USDA said April 9.

“There are no indications yet that China’s demand for soybeans has been curtailed by higher U.S. prices,” said Dale Schultz, a commodity specialist at Gottsch Enterprises in Hastings, Nebraska. “U.S. supplies continue to tighten and that is the driving prices higher.”

Soybean futures for July delivery rose 21.5 cents, or 2.1 percent, to $10.33 a bushel on the Chicago Board of Trade. On April 17, the most-active contract reached $10.645, the highest since Oct. 1. Soybeans were the second-biggest gainer behind cotton today among the Reuters/Jeffries CRB Index of 19 raw Materials.

Exporters sold 808,300 tons in the week ended April 9, double the prior four-week average, the USDA said on April 16. About half of the sales went to China. Shipments of animal feed made from soybeans surged 95 percent to 167,200 tons from a week earlier as output fell in Argentina, the biggest exporter.

Production in Argentina, the third-largest shipper of soybeans, will fall 20 percent to 37 million tons this year from 2008, the Buenos Aires Cereals Exchange said last week. Drought and pests will trim yields in some areas by 26 percent, the exchange said.

Argentina Tax Dispute

Argentine farmers are limiting sales in a yearlong dispute with the government to lower oilseed-export taxes, boosting demand for soybean meal and vegetable oil from the U.S., Anne Frick, a senior oilseed analyst for Prudential Financial Inc. in New York, said in a report.

Before today, the so-called crush margin based on futures, which reflects profit from processing soybeans into animal feed and vegetable oil, climbed 50 percent this year.

The USDA forecast on April 9 that companies including Bunge Ltd. and Archer Daniels Midland Co. will turn 1.635 billion bushels into animal feed and vegetable oil in the year ending Aug. 31, down 9.2 percent from a year earlier.

“CBOT crush margins are widening out, which adds credence to our case that the U.S. soybean crush may exceed the USDA’s current forecast,” Frick said. “Our estimate is 1.67 billion bushels,” which will tighten U.S. inventories, Frick said.

Soybeans are the second-biggest U.S. crop, valued in 2008 at $27.4 billion, government figures show. Corn was the largest at $47.4 billion.