Soybeans Rise on Higher Export Demand for Shrinking U.S. Supply

May 29 (Bloomberg) -- Soybeans rose, capping the biggest monthly advance since June, on speculation that overseas demand will reduce supplies from the U.S, the world’s biggest grower.

Exporters sold 237,400 metric tons of U.S. soybeans in the week ended May 21, boosting commitments in the current marketing year by 14 percent from a year earlier, the U.S. Department of Agriculture reported today. About 227,000 tons were sold for the year that starts Sept. 1, boosting those sales to 3.77 million tons, up 62 percent from a year earlier, USDA data show.

“Export sales will keep the bullish enthusiasm running high,” Mark Schultz, a Northstar Commodity Investments vice president in Minneapolis, said by telephone. “Rising demand for new-crop soybeans underscores overseas concerns about reduced crops” in Brazil and Argentina, the two biggest exporters after the U.S., he said.

Soybean futures for July delivery rose 5 cents, or 0.4 percent, to $11.84 a bushel on the Chicago Board of Trade. The most-active contract rose 1.5 percent this week, climbing for a fifth straight week, and jumped 12 percent for the month. The price touched $12.0075 on May 27, the highest since Sept. 25.

U.S. inventories on Aug. 31, before the harvest, will drop to a five-year low of 130 million bushels from 205 million bushels a year earlier, the USDA said on May 12.

Dollar Tumbles

The dollar weakened to a five-month low, heading for its biggest monthly decline this year against the euro. The U.S. currency slumped as mounting evidence that the global recession is easing sent investors searching for higher-yielding assets, including commodities, said Victor Lespinasse, a market analyst for GrainanAlysts.com in Chicago.

The U.S. Dollar Index, a six-currency gauge that includes the euro and yen, fell as much as 1.6 percent to the lowest since Dec. 18. The slump helped the Reuters/Jefferies CRB Index of 19 raw materials surge 14 percent in May, the biggest monthly rise since July 1974.

“Traders are bulled up on the sharp sell-off in the dollar index today,” Lespinasse said. “A lower dollar makes U.S. grains more competitive in the world market, boosting export prospects.”

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.