U.S. grains: China woes push soy to six-year low, soyoil to nine-year low

Chicago | Reuters — U.S. soybean futures dropped to their lowest levels in over six years on Monday and soyoil touched a nine-year low as concerns about China’s faltering economy fuelled selloffs in commodities and equities markets.

Broad selling pressured markets early as investors rushed for the exits after stock prices in China, the world’s top soy importer, tumbled nearly nine per cent. However, soybean futures pared losses and both corn and wheat turned higher as U.S. stocks rebounded from steep session lows.

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Soybeans have dropped in six out of the last seven sessions on worries that signs of weakness in China’s economy spell trouble for demand. Expectations for bumper U.S. corn and soy harvests have also pressured farm markets recently.

Prices for each crop are down more than 15 per cent from last month, when nearby soybeans set a seven-month high and corn reached a one-year high.

“Today’s price action is less about corn or soybean yield and more about a complete meltdown in global equity markets,” said Kayla Burkhart, a grain broker for CHS SunPrairie at Minot, N.D.

Chicago Board of Trade September soybeans fell 12-1/2 cents to $8.92-3/4 a bushel after trading as low as $8.74, the lowest price for a front-month contract since March 2009 (all figures US$). Most-active November soybeans slid 15-1/2 cents to $8.74 after setting a contract low of $8.55.

September soyoil shed 0.81 cent to 26.55 cents per pound, with the front-month contract hitting its lowest since October 2006.

Aside from updates on China’s economy, grain traders on Monday will be paying close attention to the U.S. Department of Agriculture’s weekly crop condition report, said Karl Setzer, risk management team leader for MaxYield Cooperative in Iowa.

Condition ratings for the U.S. corn and soybean crops, due at 3 p.m. CT, are expected to be unchanged from the previous week after scattered rainfall benefited some fields, according to analysts polled by Reuters.

Weakness in the U.S. dollar helped lift grains off their session lows, traders said.

CBOT December corn ended up 3-1/4 cents to $3.80-1/2 a bushel, and December wheat gained four cents to $5.08 a bushel. Kansas City hard red winter wheat and MGEX spring wheat hit their lowest levels in more than five years before rallying.

Commodity funds sold an estimated 15,000 soybean contracts and 6,000 soyoil contracts, traders said. They bought an estimated 13,000 corn contracts and 4,000 wheat contracts at the CBOT.

Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by P.J. Huffstutter in Chicago, Colin Packham in Sydney and Gus Trompiz in Paris.

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