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Soybeans hit record-high on China demand
2008-03-02
Soybean futures rose to their highest levels ever Friday because of strong demand from China and the dollar's decline to an all-time low. Other agricultural futures fell. The dollar on Thursday slumped to a record low versus the euro, which bought as much as $1.52. The greenback staged a slight recovery Friday, but the longer-term trend is down -- the dollar has plunged more than 40 percent versus the euro in the last six years. The weakness has been a boon for commodities, making everything from oil to corn appear cheaper to foreign investors and a more attractive place to invest during times of inflation. Soybean prices have surged more than 15 percent this year, driven higher by poor harvests around the globe and growing Chinese demand for the beans used to feed people and livestock. Earlier this month, China announced that bad winter storms had severely damaged 40 percent of the country's rapeseed crop, increasing expectations that the country will boost buying of soybeans to make up the shortfall. China is the No. 1 buyer of U.S. soybeans, purchasing 25 percent of the entire crop yearly. "China is leading the way with soybeans," said Jason Ward, analyst with Northstar Commodity in Minneapolis. "Their urban population has grown by 400 million people in the last 30 years. They have more money, more meat in their diet and are eating more oils, too. The big unknown is how much they can consume in years to come." Soybeans for May delivery gained 24 cents to settle at $15.365 a bushel on the Chicago Board of Trade, after earlier rising to an all-time high of $15.39 a bushel. Other agriculture futures traded mixed. Wheat for May delivery plummeted 79 cents to settle at $10.86 a bushel, while March corn gained 2.75 cent to settle at $5.46 a bushel. Soybean prices shot up nearly 80 percent last year and are poised for another stellar performance in 2008. U.S. exporters have already sold more than three-quarters of the soybeans the Agriculture Department predicts for the whole marketing year, which ends in June. Although current supplies appear ample, analysts say the market is headed into a downward trend and that farmers need to plant more soybeans than last year -- when an ethanol boom led farmers to favor planting corn acres over soybeans. In precious metals markets, gold continued its upward trek, hitting another record amid a weak dollar, high crude prices and inflation concerns. Gold for April delivery gained $7.50 to settle at $975 an ounce on the New York Mercantile Exchange, after earlier surging as high as $978.50 -- a new record. Other precious metals traded mixed. Silver for March delivery added 17.8 cents to settle at $19.808 an ounce on the Nymex. The metal earlier rose to $19.925, its highest level since 1980. Nymex copper, meanwhile, dropped 1.15 cents to settle at $3.8520 a pound. In energy markets, oil futures retreated from a new overnight record above $103 as the dollar gained strength and Turkish forces withdrew from northern Iraq. Light, sweet crude for April delivery fell 75 cents to settle at $101.84 a barrel on the Nymex. The contract earlier rose to a record $103.05 in electronic trading. Other energy futures were mixed Friday. March heating oil fell 0.59 cent to settle at $2.8397 a gallon while March gasoline futures rose 1.66 cents to settle at $2.5123 a gallon. Both contracts expired after the close of trading.
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