U.S. soybean futures settled at their highest level in nearly a year, underpinned by the risk of smaller world supplies as weather threatens global production potential.

The combination of potential freeze damage to Canadian canola crops, frost threats for China soybeans and a lack of soil moisture for South American plantings served as catalysts to lift prices, said Mike Zuzolo, president of Global Commodity Analytics and Consulting.

Weather was the dominant feature, providing enough of a concern to keep speculators jumping back in the market, Zuzolo said. Speculative funds were estimated buyers of 6,000 lots. Fund activity is a measure of investment money flow in the market.

Chicago Board of Trade November soybeans, the most-active contract, ended 15 1/2 cents or 1.5% higher at $10.84 1/2.

The risk of tighter global supplies amid potential output reductions in Canada as well as in China due to cold weather, and the threat of delayed seedings in South America due to a lack of soil moisture, is seen buoying U.S. export demand.

Parts of Brazil are too dry as the prime window for planting approaches next month, and a smaller South American crop could give another leg up to U.S. exports, helping whittle down supplies from a record crop in the U.S., Farm Futures analyst Bryce Knorr said in a market note.

No rain is expected across northern growing areas in Brazil, including Mato Grosso, the largest soybean producing state, through the next 10 days, Cropcast Weather Services said in a midday forecast.

Meanwhile, fresh export demand from China provided underlying support to offset cash market weakness, with the market encouraged by traders' willingness to take on added risk in the face of a lower U.S. dollar index.

The U.S. Department of Agriculture announced Monday morning that private exporters reported 225,000 metric tons of U.S. soybeans were sold to China for delivery in the 2010-11 marketing year.

The USDA is scheduled to release its weekly crop progress report at 4 p.m. EDT, with analysts anticipating harvest progress near 5% complete.

SOY PRODUCTSSoy product futures climbed in step with soybeans. Soyoil futures were the upside leader of the products, rising on borrowed strength from soybeans, crude oil and strong gains in world vegoil markets amid the threat of low world vegoil supplies, analysts said.

December soyoil settled 0.75 cents or 1.8% higher at 43.05 cents per pound. Speculative funds were estimated buyers of 3,000 lots in soyoil. December soymeal ended $1.70 or 0.6% higher at $310.20 per short ton. Speculative funds were estimated buyers of 1,000 lots in soymeal.

December oil share was 40.99% while the Nov/Dec soybean crush margin ended at 71 1/2 cents.

-By Andrew Johnson Jr., Dow Jones Newswires; 312-347-4604; [email protected]



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