The soybean rally surmounted data showing a surprise fall in US consumption of the oilseed as investors questioned the role of cold US weather, besides being spurred by Brazil's dryness to inject more risk premium into prices.
US oilseed processors crushed 156.943m bushels of soybeans last month – well short of the 162.4m bushels that investors had expected.
The figure, from the National Oilseed Processors Association, was also below the record 165.4m tonnes in December, besides the 158.2m bushels reached in January last year.
However, the data did little damage to a rally in soybean futures, which for March stood 1.6% higher at $13.59 a bushel with about an hour's trading to go in Chicago, setting course for what would be the highest close for a spot contract in five months.
The resilience reflected in part doubts that the NOPA data showed a true picture of soybean demand, coming for a month when US logistics were tested by the "polar vortex" which brought record-cold temperatures to many areas.
"You have to ask whether the lower crush figure was because of weaker demand, or down to the weather," Jerry Gidel, chief feed grains analyst at broker Rice Dairy, told Agrimoney.com.
The strong soymeal basis – the cash price over futures - indicated "that there was no shortage of demand".
Separately, CHS Hedging said that the "cash soymeal continues to drive the market, breaking contract highs".
In fact in Chicago, May soymeal futures, the best-traded contract, touched $13.47 ¾ a bushel on Tuesday, still short of its high of $13.95 ¾ a bushel set in August 2012.
Meanwhile, concerns over damage to crops from the dry weather in Brazil also supported soybean prices, with particular focus on a downgrade by analysis group AgRural of 1.8m tonnes, to 87m tonnes, in its forecast for the South American country's harvest.
While still a record, this is below the 90.0m tonnes estimated by the US Department of Agriculture, whose data set world benchmarks, and Brazil's Conab bureau.
"A heat wave in Brazil and the country's driest rainy season in decades have taken a toll on parts of Brazil's production areas," Iowa-based broker US Commodities said.
"Parts of Mato Grosso and Parana, Brazil's biggest producers of corn and soybeans, received less than 60% of normal rainfall in the past 90 days."
In fact, Mato Grosso is reckoned to have got off relatively lightly, with crops sufficiently developed to avoid significant damage from dryness – indeed, harvest is now an estimated 37% completed – while some parts of the state actually received a surplus of rain.
However, "in areas of northern Parana, some soybean yields are down as much as 45%," said Michael Cordonnier, the respected crop scout.
"It is the later-planted soybeans that have been most impacted because the hot and dry conditions occurred during the critical pod-filling period."
He added that Sao Paulo, better known for sugar cane and orange production, "has been one of the hardest hit areas and the Secretary of Agriculture in the state estimates that some soybean yields in the state might be down as much as 40%".
Separately, analysis group Oil World on Tuesday cut to 12m-13m tonnes, from 16m tonnes, its forecast for the growth in world soybean inventories this season, citing a "severe moisture deficit" in Brazil in January and early February.
This had cut production potential for Brazil and parts of Paraguay - where the government warned that the dryness would cut output to 8.6m tonnes from the 9.3m tonnes seen last year, and which the USDA has forecast will be repeated this time.
However, Oil World flagged that world soybean output will still "turn out sharply above estimated consumption… But the surplus will be less than expected previously".
Soyoil - the other main product, with soymeal, from processing soybeans – also performed strongly on Tuesday, standing 2.4% higher at 40.42 cents a pound for May delivery.
The NOPA data showed US soyoil stocks last month at 1.794bn pounds, up 112.9m pounds month on month, but some 47m pounds below market expectations.
Furthermore, palm oil, the rival vegetable oil, closed higher in Kuala Lumpur, up 1.2% for May delivery at 2,714 ringgit a tonne, the best close for a benchmark contract since September 2012.
The rise in palm oil has been fuelled by data from cargo surveyors showing a surge of some 30% in Malaysian palm exports in the first half of this month.
"The revival in exports is mainly caused by tight oilseed supplies, causing oilseed prices to hike," Singapore-based broker Phillip Futures said.
"As such, it provided an incentive to overseas buyers to switch to palm oil as a cheaper food and biodiesel alternative. This will boost external demand.
"Furthermore, the end of winter in northern hemisphere countries will encourage more buying of palm oil," whose relatively high solidification point makes it unsuitable as a raw material for making biodiesel for use in cold weather.