Soybeans Set for Fourth Weekly Advance on Demand for U.S. Crop

May 22 (Bloomberg) -- Soybeans headed for a fourth weekly gain on improved demand prospects for the U.S. crop amid declining output in South America. Corn and wheat also climbed.

The oilseed is up 4.2 percent this week and touched $11.895 on May 20, the highest since Sept. 26. U.S. exporters reported sales of 700,634 metric tons in the week ended May 14, up 74 percent from the previous week, the Department of Agriculture said yesterday. Sales of soybean meal in the four-week period through May 14 doubled from a year earlier.

“Soybeans are targeting $12 a bushel,” said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co. “The USDA data showed demand for the U.S. crop has increased sharply even during the seasonal peak of South American oilseed exports.”

Soybeans for July delivery added 0.2 percent to $11.7675 a bushel on the Chicago Board of Trade at 2:42 p.m. Singapore time. Futures have gained 20 percent this year.

China bought 27 percent of total U.S. soybean exports last week. The world’s biggest buyer has boosted purchases of U.S. soybeans to 18.5 million tons since Sept. 1, a 41 percent increase from a year earlier, the USDA said yesterday.

U.S. inventories on Aug. 31, before the harvest, will probably drop 37 percent to a five-year low of 130 million bushels, the USDA said on May 12.

Estimated global production this year will decline to 212.8 million tons because of smaller crops in drought-hit South America, the USDA said. The agency’s forecast a month ago was 218.8 million tons. Last year, output was a record 221.1 million tons.

Corn for July delivery advanced 0.4 percent to $4.2575 a bushel at 2:45 p.m. Singapore time. The price reached $4.3475 on May 20, the highest since Oct. 9, on speculation planting delays would reduce acreage and yields in the U.S. The grain has gained 2 percent this week and 4.6 percent this year.

July-delivery wheat added as much as 1.7 percent to $6.035 a bushel and last traded at $6.015. The contract has increased 4.2 percent this week, reaching a high of $6.0475 on May 20, the highest since Jan. 26. Still, futures have fallen 1.5 percent this year.

Farmers in Western Australia, the country’s biggest grain grower and exporter, will be able to begin planting after the state’s northern wheat region got “widespread” rain, CBH Group said.

There are reports of between 15 millimeters (0.6 inch) and 25 millimeters of rain in the northern wheat belt, Michael Musgrave, operations manager for the Perth-based grain handler and exporter, said today. The rain is “very pleasing” after a dry start to the growing season, he said.

Grain farmers in Australia, the world’s fourth-largest wheat exporter, need rain between April and June to sow crops including wheat, barley and canola.