Chicago | Reuters — U.S. soybean futures dropped 2.1 per cent to their lowest in more than five weeks on Tuesday on good conditions for growth in Brazil and Argentina, technical pressure and a steep decline in soyoil prices, traders said.
The South American weather also weighed on corn futures, while wheat backed off on profit taking after hitting a 5-1/2-month high early in the trading session.
Soyoil, weighed down by a glut of domestic supplies and falling crude oil prices, dropped to its lowest since March 2009.
Soybeans broke a technical “head and shoulders” pattern, which led to some liquidation by investment funds and may have attracted some fresh shorts into the market, said Greg Grow, director of agribusiness at Archer Financial Services.
The benchmark Chicago Board of Trade January soybean futures contract closed down 21-1/4 cents at $9.95-3/4 a bushel, breaking through key support at the $10/bu. level late in the trading day (all figures US$). The front-month contract hit its lowest since Oct. 27.
“This was a devastating close for any bulls out there, and we should continue the down move tomorrow,” Charlie Sernatinger, analyst for ED+F Man Capital, said in a note to clients.
CBOT January soyoil dropped 1.08 cents to 31.28 cents per pound. Soyoil hit fresh contract lows across the board.
CBOT March corn fell 8-1/2 cents to $3.81-1/4 a bushel and dropped through its 20-day and 30-day moving averages.
“Watching South American weather becomes the dominant feature right now,” Grow said. “Rains have been adequate so far and timely across most of the major growing areas. Forecasts look generally favourable.”
CBOT March soft red winter wheat fell 3-1/2 cents to $6.03-1/4 a bushel. The front-month wheat contract hit its highest since June 10 before turning lower.
Some winter grain crops in Russia and Ukraine are vulnerable because they have been weakened by dry conditions since sowing and are now facing freezing temperatures with little snow cover.
Traders also noted smaller-than-expected wheat production in Australia as drought curbs output in the world’s fourth largest exporter.
— Mark Weinraub is a Reuters correspondent covering crop commodity markets from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Colin Packham in Sydney.