GRAINS-US soybeans near three-week high as China buys soy

Trade the News

Thursday September 09, 2010 09:36:20 AM GMT

* Soybeans buoyed by large soyoil export sales

* Grains softer on higher dollar, weak oil and equities

* Wheat retreats from 3-week top, corn from 23-month high

* Larger Russian grain stocks weigh on wheat

* Traders take profits ahead of Friday's USDA crop report (Recasts, adds quotes, updates prices with U.S. market close)

By Karl Plume

CHICAGO, Sept 7 (Reuters) - U.S. soybean futures rose more than 1 percent to a near-three-week high on Tuesday as soybean oil futures rallied more than 2 percent on large soyoil sales to China which suggested stronger demand for the oilseed.

Wheat futures weakened as an upward revision to Russian grain stocks, a firmer dollar and weaker outside markets fueled profit-taking following Friday's rise to a three-week high.

Corn rose to a 23-month peak early but ended little changed as investors booked profits ahead of a monthly government crop report due later this week.

"Our leader today is soybean oil," said analyst Bill Nelson with Doane Advisory Services.

"When you tie soybean oil with China in the same sentence, buying from us, that's good for overall soybean demand -- to be able to find an outlet for (what is) typically your marginal product," he said.

The U.S. Agriculture Department said Tuesday that private exporters reported U.S. soyoil sales totaling 90,500 tonnes to China, Peru and an undisclosed destination.

A trade spat between China, the world's top soyoil importer, and Argentina, the top exporter, has diverted more demand to the United States.

U.S. exports have also benefited from slower soyoil exports from Brazil, which is using more of its domestically produced supply for the production of biofuel.

Spot soybean futures on the Chicago Board of Trade settled up 14 cents, or 1.4 percent, at $10.43-3/4 per bushel, the highest close since Aug. 17. New-crop November soybeans ended up 17 cents, or 1.6 percent, at $10.52 a bushel.

WHEAT, CORN WEAK

Wheat and corn struggled to follow the rally in soybeans as an upward revision to Russian grain stocks, a firmer dollar and weak outside markets fueled profit-taking which pulled markets from recent peaks.

Traders were also cautious ahead of Friday's monthly USDA crop report, which was expected to show a downward revision in U.S. corn output and may show another decline in world wheat production.

"It was overdone Friday and the outside markets are weak so it's setting back," said Paul Haugens, vice president for Newedge USA.

Russia's agriculture minister was quoted by the Interfax agency as saying grain stocks had been revised up to 26 million tonnes from 21.7 million and that Russia had enough grain to feed itself.

President Dmitry Medvedev signaled on Monday that a ban on grain exports could be lifted earlier than Dec. 31 this year, but the Kremlin later clarified the statement to say that the ban will remain in place until the 2011 harvest, not the 2010 harvest.

Questions also emerged about grain exports from another major Black Sea region supplier as traders in Ukraine said the country's customs service is holding a month's supply of grain at ports without official explanations.

CBOT September wheat fell to $7.02-1/2 a bushel and the more active December contract dropped to $7.35-1/4, both down 0.8 percent.

CBOT September corn rose 1-3/4 cents to $4.51-1/2 per bushel while December gained 1-3/4 cents to $4.66-1/4. (Additional reporting by Naveen Thukral in Singapore, Gus Trompiz in Paris, Sam Nelson and Julie Ingwersen in Chicago; editing by Sofina Mirza-Reid)

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