Chicago | Reuters — U.S. soybean futures tumbled on Wednesday under pressure from expectations that a bumper South American crop will raise global inventories, while large supplies pushed wheat futures to a 3-1/2 year low.
Corn futures also declined.
Rains in hot, dry areas of Argentina improved the outlook for soybean production by “confining and shrinking the risk area to a smaller and smaller region,” said Jim Gerlach, president of A/C Trading. Argentina is the world’s third largest soybean exporter, after Brazil and the U.S.
“This rain in Argentina was a million-dollar rain,” Gerlach said.
March soybeans ended down 16-1/4 cents to $12.69-1/4 a bushel at the Chicago Board of Trade (all figures US$).
Traders are watching weather conditions closely amid strong demand for soybeans from China, the world’s top importer of the oilseed. Global buyers are expected to shift their purchases to South America from the United States as the harvest approaches in Argentina and Brazil.
Argentina will jump-start soy exports over the weeks ahead as farmers, who have hoarded beans to protect themselves from the weakening peso and galloping inflation, are forced to sell by the time harvesting starts in March.
In Brazil, strong yields in the country’s top soy-growing state Mato Grosso should guarantee a record harvest for the country in the 2013-14 crop year.
The U.S. Department of Agriculture (USDA) attache in Brazil on Tuesday estimated Brazil’s 2013-14 soybean crop at 89.5 million tonnes, above the USDA’s official forecast of 89 million tonnes and sharply up from 81.6 million tonnes last year.
A crop of 90 million tonnes would put Brazil ahead of the U.S. as the world’s top soy producer for the first time.
“New sales of beans to China are nearly all going to South America,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage.
Data due out from USDA are expected to show U.S. soybean export sales last week were 750,000 to 1.05 million tonnes, analyst said. Export sales are projected to be 550,000 to 750,000 tonnes for corn and 300,000 to 500,000 tonnes for wheat.
CBOT March wheat slid 14-1/2 cents to $5.51-1/2 a bushel and set a contract low of $5.50, after rising in the previous session when U.S. wheat won business in a purchase tender from Egypt.
Selling accelerated as technical sell-stops were triggered when the contract fell below $5.60 a bushel, traders said.
A warm-up in U.S. temperatures helped pressure prices by easing concerns about potential damage to the wheat crop from bitterly cold weather, Gerlach said.
Temperatures in the southern Midwest winter wheat belt are forecast to run a few degrees below average, with lows in the teens and 20s F (-12 to -4 C).
“The cold weather’s over… now what?” Gerlach said. “We’re back to trading a plentiful global situation.”
March corn fell 4-1/2 cents to $4.27-1/2 a bushel amid profit-taking, traders said.
Commodity funds sold a net 8,000 CBOT wheat contracts, 7,000 soybean contracts and 6,000 corn contracts, traders said.
— Tom Polansek reports on agricultural futures markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hogan, Colin Packham and Dominique Patton.