Soybeans Touch Three-Week Low as Demand Seen Switching to Brazil

January 24, 2014 03:33 AM
Soybeans Touch Three-Week Low as Demand Seen Switching to Brazil

Soybeans reached a three-week low in Chicago on speculation that Chinese demand will switch to Brazil from the U.S. as the South American harvest accelerates.

Brazil, the world’s biggest soybean exporter, finished about 5 percent of the harvest in Mato Grosso, its largest producing state, and 3 percent in Parana, forecaster Somar Meteorologia said Jan. 21. The country may produce a record 89 million metric tons of the oilseed, according to the U.S. Department of Agriculture. U.S. export sales since the marketing year began Sept. 1 rose 27 percent from a year earlier as of Jan. 9 on increasing demand from China, the top consumer, USDA data show.

"There is more talk of international grain merchants switching origin from U.S. to Brazil for soybeans going to China," Paul Georgy, the president of broker Allendale Inc., said in an e-mailed report today. "The harvest is progressing and yields are above average."

Soybeans for delivery in March dropped 1 percent to $12.64 a bushel at 7:20 a.m. on the Chicago Board of Trade, poised for a fourth straight daily slide and a 4 percent retreat this week. The oilseed reached $12.635, the lowest intraday price for a most-active contract since Jan. 2.

Corn for delivery in March fell 0.6 percent to $4.2625 a bushel, paring a weekly advance to 0.5 percent.


Dormant Crops


Wheat for delivery in March declined 0.5 percent to $5.67 a bushel, erasing a gain of as much as 0.6 percent. Prices still headed for a 0.6 percent weekly increase, the first since the week ended Nov. 29, amid concern that freezing temperatures in the U.S. will hurt dormant winter crops. Futures tumbled 22 percent in 2013 on the outlook for record global production and touched $5.605 a bushel on Jan. 10, the lowest since July 2010.

The U.S., the world’s top wheat exporter, will experience a cold pattern in the next two weeks, Commodity Weather Group said in a report today. Still, the temperatures reaching below 0 degrees Fahrenheit (minus 17 degrees Celsius) mostly will remain in areas of the Midwest where crops are insulated by protective snow cover, according to the report. Much of the central and southern U.S. Great Plains, the largest winter-wheat producing region, has no snow cover, National Weather Service data show.

In Paris, milling wheat for delivery in March dropped 0.3 percent to 193.25 euros ($264.64) a ton on NYSE Liffe, paring a weekly gain to 0.8 percent.


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