Soybeans Drop on Chinese Cancellation Concern

December 13, 2013 02:40 AM
Soybeans Drop on Chinese Cancellation Concern

Soybeans dropped to the lowest in more than a week, extending yesterday’s slide, on speculation that top consumer China may cancel some purchases from the U.S. early next year as Brazil’s record harvest becomes available.

China bought 24.5 million metric tons of U.S. supplies by Dec. 5, the most for this time in the season and 33 percent more than a year earlier, U.S. Department of Agriculture data show. About 10.8 million tons of those soybeans are waiting to be shipped. Surging demand from China means the U.S. has sold 96 percent of the soybeans the government expects to be exported during the entire marketing year, the USDA estimates.

There is speculation "that China might cancel some of the orders it has already placed," Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in an e-mailed report. "Reports of good planting conditions in South America make a high supply of soybeans from Brazil and Argentina next spring increasingly realistic. China may then take advantage of this to purchase soybeans from the region at lower prices."

Soybeans for January delivery fell 0.9 percent to $13.125 a bushel by 7:22 a.m. on the Chicago Board of Trade, extending yesterday’s 1.5 percent slide, the biggest drop in almost four weeks. Earlier today, the price touched $13.1225, the lowest since Dec. 4. The oilseed fell 6.9 percent this year, compared with corn’s 38 percent plunge. The USDA expects global production of both crops to rise to records.

Brazil, the world’s biggest soybean exporter, may harvest 90 million tons, 10 percent more than the prior year’s record crop, according to government forecaster Conab. Last season, a backlog of vessels at Brazil’s main ports spurred China to cancel some shipments, shifting demand to the U.S. China may be buying more U.S. soybeans now as insurance against potential delays in Brazil again this year, according to Dan Hofstad, a risk management consultant at INTL FCStone.


Genetically Modified


Corn for March delivery fell 0.6 percent to $4.315 a bushel, extending a 1.1 percent decline from yesterday. China has rejected more than 180,000 tons of U.S. corn in recent weeks after finding an unauthorized genetically modified variety in shipments, according to General Administration of Quality Supervision Inspection and Quarantine.

Wheat for March delivery fell 0.6 percent to $6.30 a bushel, the lowest for a most-active contract since June 2012. In Paris, milling wheat for March delivery gained 0.2 percent to 203 euros ($279) a ton on NYSE Liffe.

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