Hmmm. China Canceling South American Soybeans

March 13, 2014 01:03 AM

What Traders are Talking About:

Overnight highlights: As of 6:00 a.m. CT, corn futures are trading mostly 2 to 4 cents higher, soybeans are 2 to 6 cents higher in old-crop contracts and 5 to 9 cents higher in new-crop contracts, while wheat futures are mostly 2 to 6 cents higher. Cattle futures are mixed and hog futures are mildly firmer in electronic trade.


* China cancels South American soybeans, more to come. Rumors of Chinese soybean cancellations were rampant Wednesday and now Reuters is reporting China has canceled 10 cargoes (up to 600,000 MT) of soybean purchases from Brazil and Argentina that were scheduled to ship March through May, according to trade sources. The sources say Chinese buyers are looking to cancel or delay shipment on another 30 cargoes (up to 1.8 MMT) of soybean commitments because of weak demand and poor crush margins.

The long and short of it: Chinese cancellations at this time of year are not surprising, but it is a little curious they are washing out South American purchases instead of U.S. soybeans. The potential reason why may run deeper than many currently believe, but I need to check with sources before going into further details. Look for more details in Pro Farmer newsletter this week.

* More disappointing Chinese economic data. China's industrial output and retail sales for January and February combined came in lower than expected at 8.6% and 11.8% above year-ago, respectively. This is just the latest in a string of disappointing economic data out of China, signaling the country's economy is slowing. In his final address at the annual meeting of the National People's Congress, Premier Li Keqiang warned of "severe challenges" China's economy faces this year. Given continued disappointing economic data, speculation is rising that China will need to ease monetary policy to spur economic growth.

The long and short of it: Commodities as a whole have softened since last Friday amid growing concerns with China's economic performance. The Thomson Reuters/Jefferies CRB Commodity Index is working on its first lower weekly close since the first full week of January.

* No 'What Traders are Talking About' on Fridays. Since I am now writing the weekly "From the Editor" blog, I will no longer be updating this column on Friday mornings. My musings and commentary in "From the Editor" are available Friday afternoons in the "Blogs" section on the home page of


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