Soybean Futures Surge as Price Drop Discourages Farmer Sales

June 3 (Bloomberg) -- Soybeans rose the most since February after spot prices near a seven-week low discouraged farmers in the U.S. and South America from selling stockpiles.

The average U.S. cash-soybean price on May 25 fell to the lowest level since April 5, data from the Minneapolis Grain Exchange show. Processors and exporters in Brazil raised premiums for cash supplies yesterday, according to Sao Paulo- based trader Ary Oleofar Corretora de Mercadorias. Cash prices were also raised for soy-based animal feed in Argentina and Brazil, the biggest exporters of the commodity.

“Farmers are not selling and that is tightening supplies and raising bids from processors and exporters,” said Mario Balletto, a grain analyst for CitiGroup Global Markets Inc. in Chicago. “Prices need to get to higher levels to encourage farmers to sell more beans.”

Soybean futures for July delivery rose 22.5 cents, or 2.4 percent, to $9.55 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since Feb. 10. The price is down 8.9 percent this year on forecasts for combined output in Brazil and Argentina to rise 36 percent to a record.

Prices also rose as wet weather threatened to delay planting and reduce the yield potential of crops in the U.S., the world’s top producer and exporter of the oilseed.

Two storms will bring as much as 3 inches (7.6 centimeters) of rain to fields from North Dakota to Georgia in the next week, MartellCropProjections.com said in a report. The soil is already saturated in some areas after receiving more than twice the normal rainfall in May. That has slowed plant emergence and early growth, the private forecaster said.

U.S. planting was 74 percent completed as of May 30, compared with 75 percent on average in the past five years, the U.S. Department of Agriculture said this week.

“Soybean planting has been delayed,” Balletto said. “The plants are small after ample rains.”

The U.S. soybean crop was valued at $31.8 billion last year, second only to corn at $48.6 billion, government figures show.