U.S. soybean futures soared 2 percent on Thursday to post their biggest one-day advance in a month, notching gains for the third day in a row on strong cash basis markets, slow farmer selling and waning harvest of the country's 2012 crop.
Soybeans have gained more than 1 percent for the week and are on track to post the first weekly advance since early September as investors reversed course from 3-1/2-month lows set just a few days ago.
"The harvest is very much wrapping up and producers are closing the bin doors, they've stopped selling," said Jason Roose, a co-owner and market specialist for U.S. Commodities in Des Moines, Iowa.
"This post-harvest rally will probably continue for the next two to three weeks, maybe gaining 40 to 60 cents from the lows we hit on Monday," he said.
Roose said the rally would be capped by prospects for harvest in early 2013 of a record 81-million-tonne Brazilian soybean crop, a near 22 percent jump from this past season.
Soybeans also drew support from technical buying and bargain hunting as traders defended the key $15-per-bushel level, an area briefly penetrated earlier in the week.
Soy plunged to a 3-1/2-month low of $14.85-1/2 on Monday, down 17 percent, or $3 per bushel from the record high of nearly $18 per bushel set in early September.
"The market was very oversold from a technical standpoint," Roose said.
CHINA PROSPECTS, STRONG CASH LEND SUPPORT
Continued brisk sales of U.S. soy to China, the world's biggest soy buyer, helped buoy the oilseed in addition to lifting corn and wheat, traders and analysts said. U.S. cash dealers said soymeal spot cash basis offers were steady to higher on moderate domestic demand, strong export demand and tight nearby supplies. Soymeal is the protein additive of choice in most livestock and poultry feeding rations.
Additionally, signs emerged of a rejuvenated soyoil market. "Soybean oil is looking like it may have formed a trading bottom on the chart and it has moved higher this week," said Bill Nelson, oilseeds analyst for Doane Advisory Services in St. Louis, Missouri.
"It does comprise a significant portion of the value of the soybean," he said.
Spot soyoil spiked to a session high of 52.39 cents per lb, a three-week peak and up 6 percent from Monday's 3-1/2-month low of 49.41.
Corn rose 2 percent, gaining for a third straight session. Wheat increased for the second day in a row, rallying over 1 percent, buoyed by concerns over dry weather in Australia and the United States, the top two exporters of the grain.
Chicago Board of Trade (CBOT) November soybeans were up 2.4 percent or 36-1/4 cents per bushel at $15.45-1/2, December soymeal rose 1.89 percent or $8.60 per ton to $463.30 per ton and soyoil for December delivery was up 2.49 percent or 1.27 cents per lb at 52.30 cents per lb.
December corn rose 2.05 percent or 15-1/4 cents per bushel to $7.60-3/4 and December wheat gained 1.43 percent or 12-1/4 cents at $8.68-1/2 per bushel.
Spot basis bids for corn and soybeans were steady to firm in the interior U.S. Midwest as the harvest of both crops began to wind down and farmer selling slowed, cash dealers said.
November milling wheat in Paris added 1.36 percent at 260.00 euros a tonne, as spillover support from the U.S. market offset the impact of strength in the euro.
U.S. HARVEST NEARING AN END
"We are getting on the back side of the soybean harvest so there should be some abatement of the typical harvest pressure even in this short crop year," Nelson said.
U.S. farmers have been harvesting soybeans and corn at a record-fast pace due to early seedings and because the worst drought in more than 50 years pushed each crop to early maturity.
Lowered production due to the drought also allowed harvesters to move through the fields at a faster-than-normal pace.
The U.S. Department of Agriculture on Monday said 71 percent of the soybean crop had been harvested, up from the 58 percent five-year average, and 79 percent of the corn crop had been gathered, well above the five-year average of 38 percent.
The harvest is expected to continue at a somewhat slower pace for the next week or two and be nearly complete by the end of the month.
DRY WEATHER AN ISSUE FOR WHEAT MARKET
The effects of drought were still being felt in wheat-growing areas, with soil moisture reserves in the U.S. Great Plains hard red winter wheat region precariously low despite recent showers.
The drought that ravaged the United States this year does not appear to be abating and may spread through the winter, government forecasters said on Thursday.
"The large majority of that drought we expect to persist," said Mike Halpert, deputy director of the National Oceanic and Atmospheric Administration. "We even see drought expanding westward ... into Montana, Idaho and part of Oregon and Washington."
The dry area includes parts of Kansas, the largest U.S. producer of bread-making quality hard red winter wheat.
Some light rains are expected over the next week in the drier areas of the U.S. Plains' hard red winter states of Nebraska and South Dakota, but no rain is forecast for the southern states, said John Dee, meteorologist for Global Weather Monitoring.
"The headline would be 'no rain in the South, in Kansas, Oklahoma or Texas.' They aren't in dire need right now but they do need more rain," he said.
The wheat market was still marked by ongoing concern about harvest prospects in Australia after a dry growing season and portions of Europe's wheat belt have been stressed by dryness. Prices at 2:20 p.m. CDT (1920 GMT)