Soybean Futures Extend Rally on Waning U.S., World Inventories

May 13 (Bloomberg) -- Soybeans rose for a fourth straight session, touching a seven-month high, on forecasts that U.S. stockpiles are heading to a five-year low because of increased exports to China.

Inventories on Aug. 31, before the harvest, will drop to 130 million bushels from 205 million a year earlier, the U.S. Department of Agriculture said yesterday. The National Weather Service says as much as 4 inches (10 centimeters) of rain will saturate eastern Midwest fields in the next five days, which may further delay seeding. The USDA said 14 percent of the crop was sown as of May 10, behind the five-year average of 25 percent.

“The market is still looking at the tightening U.S. supplies,” said Chuck Shelby, a vice president at Risk Management Commodities Inc. in Lafayette, Indiana. “There is growing concern about the slow planting. Soybeans planted in wet soils increase the risk of disease.”

Soybean futures for July delivery rose 10.5 cents, or 0.9 percent, to $11.28 a bushel on the Chicago Board of Trade, after earlier rising to $11.41, the highest since Sept. 29. The most- active contract has surged 35 percent from an 11-week low on March 2.

Falling Global Production

Estimated global production this year will fall to 212.8 million metric tons, compared with 218.8 million forecast a month ago and a record 221.1 million harvested last year, because of smaller crops in South America, the USDA said yesterday.

Global consumption this year is forecast at 222.5 million tons, compared with 225.4 million projected in April. Inventories on Oct. 1, before the Northern Hemisphere harvest, will fall to 42.6 million tons from 53.1 million last year, the USDA said.

“Tightening U.S. supplies and declining global production continue to support prices,” said Mario Balletto, a market analyst for CitiGroup Global Markets in Chicago. “There is no evidence that demand is declining.”

Soybeans are the second-biggest U.S. crop, valued in 2008 at a record $27.4 billion, behind corn at $47.4 billion, government figures show.