U.S. soybean futures fell for the third day in a row on Thursday, dropping two per cent to their lowest level in nearly a month due to a new cancellation of an export deal with China, the world’s top buyer of the oilseed, traders said.
Corn futures dropped one per cent, falling below $7 and hitting their lowest level in almost six months, as demand continued to weaken (all figures US$). Wheat also fell to its lowest level since early July as a major winter storm hit the U.S. Plains states and provided some relief to key growing areas of the drought-stricken region.
Year-end selling added further pressure to all three commodities as investors pulled money out of the markets before the holidays, a time when trading volume is traditionally the lightest of the year.
"It is just continued liquidation," said Jim Hemminger, senior risk manager with Top Third Ag Marketing. "It is sort of a market that is feeding on itself with selling pressure in a thin market."
Private exporters reported the cancellation of 540,000 tonnes of U.S. soybeans sold to China — the biggest cancellation by the world’s top importer of the oilseed in at least 14 years – the U.S. Agriculture Department said.
Earlier this week, China scuttled plans to buy 300,000 tonnes of U.S. soybeans. USDA also said private exporters reported the cancellation of a separate 120,000-tonne deal, which traders said was likely destined for China.
China was likely cancelling U.S. soybeans it had purchased as insurance in the event of a poor crop in South America, said Garrett Toay, risk management consultant at Toay Commodities Futures Group in Des Moines.
"They could have overbooked here as protection," he said. "China is assuming there is nothing wrong with the Brazilian crop."
Chicago Board of Trade January soybean futures closed down 28-1/4 cents at $14.08-3/4 a bushel. Prices bottomed out at $14.02-3/4 a bushel, their lowest level since Nov. 21.
CBOT March corn was off 6-1/2 cents at $6.96-1/2 a bushel, the third straight day of declines for the front-month contract, which hit its lowest level since July 2. The front-month contract also dropped below key technical support at $6.97-3/8, which was the 50 per cent Fibonacci retracement point from its summer rally to a record high of $8.43-3/4.
Corn futures have fallen for 10 out of the last 11 sessions, dropping eight per cent during that period, due to eroding demand from overseas buyers and ethanol producers.
USDA said early on Thursday that weekly export sales of corn were 120,200 tonnes, well below forecasts for 250,000 to 550,000 tonnes.
A forecast for the biggest U.S. corn acreage since 1936 from closely watched private analytics firm Informa Economics also was weighing on prices.
"All the ingredients are there for profit-taking," said Pierre-Antoine Allard of French grains consultancy Agritel.
CBOT March wheat was off 15-1/4 cents at $7.90-1/2 a bushel. Prices hit their lowest level since July 3.
The first heavy winter storm of the season hit the U.S. Plains on Wednesday night and Thursday morning, bringing some much needed moisture to the region and providing some relief from the dry conditions that have been hampering winter wheat development in that key growing area.
Snowfall totalling four to eight inches fell in Nebraska and Kansas, with Iowa and Wisconsin also getting hit, said Joel Widenor, meteorologist with Commodity Weather Group LLC.
— Mark Weinraub covers the grain futures markets for Reuters in Chicago.