U.S. soybean meal futures extended a steep slide on Friday amid waning demand for the livestock feed, while corn futures stabilized after sharp losses this week.
Soymeal continued its free fall after closing down the daily, $20 trading limit for the past two days.
End-users are reducing their purchases of expensive old-crop soybeans, which are crushed to make meal, given the prospects for a record-large U.S. harvest and cheaper prices. Technical selling ahead of the expiration of August options contracts on Friday added pressure to prices, traders said.
“The relief is that we’ve got the August meal off of limit down and its trading,” said Paul Georgy, president of Allendale.
Chicago Board of Trade August soymeal was down 3.3 per cent at $4.33 by 10:45 a.m. CDT (1545 GMT). The contract has lost 10 per cent this week and is down nearly 17 per cent from a contract high of $521 that was reached on Monday.
August soybeans were down 0.4 per cent at $13.50-1/4 a bushel. The contract pared losses after falling to $13.30-1/2, the lowest since June 2012, in early trading.
September corn edged up 0.05 per cent to $4.96-1/4 a bushel after falling to a contract low of $4.92-1/4 on Thursday. New-crop December corn was down 0.2 per cent at $4.78 after sinking to a nine-month low on Thursday.
September wheat rose 0.7 per cent to $6.53-1/2 a bushel after matching a contract low of $6.48 in earlier trading.
“Much of this is simple short covering ahead of the weekend, especially after the losses we have seen this week,” said Karl Setzer, grain solutions team leader for MaxYield Cooperative.
The sell-off in corn and soy has pushed some buyers to the sidelines as they are waiting to see whether prices decline more, traders said.
China, the world’s top soy importer, stepped in to buy 220,000 tonnes of U.S. soybeans, the Agriculture Department said on Friday. Private exporters struck deals to sell 211,328 tonnes of U.S. corn to unknown destinations.
The sales are “largely routine and not entirely unexpected” given this week’s free fall, said Rich Feltes, vice president of research for R.J. O’Brien.
It will be difficult for corn to stage a sharp recovery because favourable weather is fueling forecasts for a record-large U.S. harvest, traders said. Farmers who have old-crop corn left from previous harvests will sell the grain if prices rise, they said.
Corn and soy futures have been pressured by declining spot basis bids across the U.S. Midwest this week. Bids continued their setback from historically high levels on Friday due to weakening demand, dealers said.
Ethanol plants, corn and soybean processors were said to have bought enough supplies in recent days to meet needs for all or part of August. The level of coverage led the buyers to reduce bids sharply, sparking declines in bids at elevators and terminals along Midwest rivers.