U.S. grains: Soybeans retreat from highest levels since September

Chicago | Reuters — U.S. soybeans fell on Thursday, retreating after five sessions of gains and a rise in early trade to the highest level since September as U.S. and South American farmers boosted sales, traders said.

Wheat futures shed nearly three per cent and corn 1.7 per cent, with all three markets pressured in a bear-spreading selloff ahead of the first notice day for deliveries against March contracts at the Chicago Board of Trade on Friday.

Strong cash values for each crop are expected to limit deliveries against futures, but speculative investors typically exit positions in contracts before they enter the delivery period.

CBOT March soybeans had a dramatic 60-cent per bushel trading range in the session, rising as much as two per cent before settling down 13-3/4 cents, or one per cent, at $13.93-1/2 (all figures US$).

The daily loss was the biggest in about a month, and some analysts said the move could be a key reversal with farmers in Brazil stepping up soybean offerings and harvest of a record crop there expected to accelerate soon.

“What a dramatic turn and one that implies a blow-off top,” said Jack Scoville, analyst at the Price Futures Group in Chicago. “This could be the reversal we’ve been waiting for.”

Heavy rains delayed harvest earlier this week in Brazil, forcing importers to buy instead from the U.S. and fueling the rally in soybeans to the highest levels in five months.

Two separate data releases on Thursday from the U.S. Department of Agriculture confirmed strong export demand and sparked investment fund buying early in the session before the selloff started at about 11 a.m. CT.

Chris Narayanan, an analyst at Societe Generale in New York, said the upcoming delivery period muddied the waters on whether or not the soybean market had peaked.

“If it was a week from now, it (the selloff) would be a stronger signal. My bias is that if we are not there, we’re getting close to the top,” Narayanan said.

Strong U.S. exports

Exports last week of corn, soybeans and wheat were within or above analyst expectations, according to USDA data.

The government also released a “flash sale” early on Thursday of a purchase by China of 112,000 tonnes of soybeans from the United States or another origin and 284,480 tonnes of corn sold to Mexico.

“Export sales were much better than expected and came in strong at a time of year when we are looking for numbers that are fairly weak,” Citigroup market strategist Sterling Smith said.

But the good export demand was ultimately offset by plentiful global stockpiles.

Egypt, the world’s top wheat importer, in a tender bought 295,000 tonnes of wheat from Russia and Romania, which can ship wheat more cheaply than the U.S. to the Middle Eastern country.

“U.S. supplies are not economically competitive at the moment,” said Andrew Woodhouse, grains analyst at Advance Trading Australasia.

CBOT March wheat finished 17-3/4 cents lower at $5.82-1/4 per bushel, the third straight session of declines.

CBOT March corn ended 7-1/2 cents lower at $4.48 per bushel.

— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Colin Packham in Sydney.

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