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Soybean futures slump after massive sales cancellation

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January 6th, 2017

Soybean futures led Chicago grain markets lower, after some dismal US export sales figures, which suggest that business is going to South American sellers.

US soybean export sales for 2016-17 shipment in the most recent week were a fraction of what was expected, after a huge cancellation from an unknown buyer.

The 900,000 tonne cancellation left net-sales at just 87,500 tonnes, where markets were expecting sales of 800,000 to 1.20m tonnes.

"Soybean sales were just terrible easily posting the lowest total of the year," said Joe Lardy, at CHS Hedging.

Soybean Futures: Change in mood

"This really hurt the psychology of the soybean market," said Darrell Holaday, at CHS Hedging.

The poor sales may shift expectations for next week's US Department of Agriculture supply and demand figures.

"Keep in mind the bulls have been hoping that USDA may increase their US export projection from their current record projection of 2.050bn bushels," Mr Holaday said.

"This number trimmed those ideas back, which will likely be followed by a disappointing weekly sales number next week," Mr Holaday said.

"The long-term danger is that total exports will be below that level if the South American production is over 155m tonnes."

Soybean Futures: Argentina dries out

Elsewhere, the fundamental picture soybeans is also not supportive.

Argentina is expected to see dry weather, which will help dry out fields for planting.

And in northern Brazil, the forecast is still pointing to needed rains over next week.

March soybean futures settled down 1.7%, at $9.95 ¼ a bushel.

Corn Futures: Weak corn sales as well

Soybean export sales were the big story of the day, but the numbers for corn and wheat were not supportive either.

Corn export sales came in at just 429,300 tonnes, where analysts were expecting 650,000 to 950,000 tonnes, the lowest sales of the marketing year.

"Even sadder is the fact that corn sales were higher than beans, meal, oil and wheat combined," noted Mr Lardy.

March corn futures settled down 0.7%, at $3.58 ¾ a bushel.

London wheat gains on currency movement

Wheat export sales came in at an underwhelming 183,600 tonnes, below the bottom end of analyst expectations, and also the lowest of the marketing year.

March Chicago wheat futures settled down 0.6%, at $4.23 ¾ a bushel.

But it was a different picture in the UK, where the falling sterling is opening up export prospects.

"UK wheat closed at its highest since the end of June 2014 on the back of a struggling sterling and emerging weather risks in key producing/exporting countries," said CRM AgriCommodities.

May wheat futures in London settled up 0.9%, at £144.75 a tonne.

 - William Clarke Agrimoney.






See Also: Corn Futures, Soybean Futures, Wheat Futures
Soybean futures, Corn, Wheat Tumble on Indications of Reduced Demand From Japan
By Jeff Wilson and Whitney McFerron - Mar 15, 2011

Soybean futures and corn tumbled the maximum allowed on the Chicago Board of Trade and wheat plunged the most in seven months on concern that the earthquake and nuclear crisis in Japan will reduce raw-material demand.

Equities in Japan had the biggest two-day drop since the 1987 crash as the risk of radiation leaks north of Tokyo escalated. U.S. Treasuries surged. Japan is the world’s leading buyer of corn, the third-largest importer of soybeans and the fifth-biggest purchaser of wheat.

“Increasing levels of radiation have people dumping positions in stocks and commodities and piling assets into cash,” said Alan Brugler, the president of Brugler Marketing & Management LLC in Omaha, Nebraska. “There’s increased risk aversion until the situation stabilizes in Japan.”

Corn futures for May delivery fell by the CBOT limit of 30 cents, or 4.5 percent, to close at $6.36 a bushel at 1:15 p.m., the lowest since Jan. 20.

Soybean futures for May delivery declined the 70-cent maximum, or 5.2 percent, to close at $12.70 a bushel, the lowest since Dec. 13.

Wheat futures for May delivery dropped 53 cents, or 7.4 percent, to close at $6.6775 a bushel in Chicago, the biggest decline since Aug. 6.

Oats fell the 20-cent maximum to a six-month low, while rice and soybean-oil futures also fell by the exchange limits in Chicago.

Shipments into Kashima and other ports on Japan’s east coast were stopped because of power outages after the 9.0- magnitude earthquake and tsunami, Zen-Noh, Japan’s largest corn buyer, said yesterday. Japan said today it plans to buy 32,381 metric tons of wheat in a tender on March 17, 76 percent less than it purchased last week.

Screen Imports

Asian countries moved to screen food imports from Japan following explosions at the Fukushima nuclear plant that raised radiation levels at the complex to harmful levels.

South Korea, Indonesia, Thailand, Malaysia, Singapore and the Philippines took steps to check fruit, vegetables, meat and seafood from Japan for nuclear material.

“It’s a fear-driven trade” focused on Japan, said Frank Cholly Sr., a senior strategist at Lind-Waldock, a broker in Chicago. “Demand is going to slow down, because even though they need to eat, they have more urgent things. They’ve got to stop the radiation leak, and they’ve got to find any survivors.”

Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, government figures show. Wheat is the fourth-largest, behind hay, at $13 billion.

 - Jeff Wilson and Whitney McFerron in Chicago at Bloomberg.