CHICAGO  - US soybeans rose for the second consecutive trading session on Monday reaching contract highs on shrinking soy supplies after the worst drought in over a half century slashed America’s crop output. 

Analysts said there continued to be reports of low US soy yield potential despite some late season showers in portions of the US crop belt that might revive some soy plants.  “Beans are leading the way, everybody is talking about the low yield numbers. Rains will help a little but it’s too late for most of the crop,” a Chicago Board of Trade floor trader said.

Also, “crude oil is up on worries about refinery slowdowns in the Gulf when Isaac hits,” he said. Fallout from Tropical Storm Isaac is likely to include

drought-relieving rainfall for a big chunk of the central and southern US Midwest, an agricultural meteorologist said on Monday.

“The big question is how much will later planted soybeans benefit,” said John Dee, meteorologist for Global Weather Monitoring.

“It would have helped a lot more if the rainfall came two weeks ago.”

New-crop November soybeans were up 10-1/2 cents per bushel at $17.42 after hitting a session high of $17.60-1/2 earlier in the trading session which is also a new contract high and above the previous high of $17.44-3/4 set just last Thursday.

December corn was down 1-3/4 cents at $8.06-3/4 with pressure stemming from profit-taking at the current high price levels.

September wheat was down 4-1/2 cents at $8.62-1/2 on disappointment that US wheat wasn’t included in a weekend sale of global wheat to Egypt.

Despite fears drought damage may cut Black Sea export supplies, Egypt bought Russian and Romanian wheat in a purchase tender on Saturday.

“Russian and Ukrainian wheat was offered extensively in the Egyptian tender on Saturday and both countries are still firmly in the export market despite the worries about export restrictions after the poor crops,” one trader said.

SOYBEANS CURRENT FOCAL POINT

The jump in soybeans came after Iowa-based Pro Farmer released their corn and soybean production forecasts on Friday, predicting US grain and oilseed production will fall to the lowest since 2003.

Pro Farmer bases their forecasts on internal company research combined with the result of its annual crop tour of the Midwest that was completed on Friday.  “The crop tour was concluded last week, and the results were disappointing for both corn and soybeans, and that is supporting the grains market today,” said Ker Chung Yang, commodities analyst at Phillip Futures.

Grains were also supported by rising crude oil futures which jumped by around a dollar on Monday on supply worries as tropical storm Isaac threatened to disrupt most US offshore oil production in the Gulf of Mexico.

Soybeans also gained after China, the world’s largest importer of the oilseed, indicated it was looking at measures to support its economy.