U.S. soybean futures tumbled on Tuesday as cash basis bids weakened in key locations in the U.S. Midwest and farmers sold some of their scarce old-crop supplies.
Corn futures also came under pressure, with the new-crop contract falling to its lowest level in more than 2-1/2 years as forecasts for nearly ideal weather during the crop’s key development phase buoyed hopes for a record harvest.
Soybeans suffered the steepest losses as a rally to 10-month highs on Monday sparked selling by farmers that temporarily eased tight supply in some areas, dealers said.
Additional pressure stemmed from unconfirmed rumors that China, the world’s top soy importer, may sell 3 million tonnes of the oilseed from government reserves, potentially reducing its demand for U.S. soybeans, they said.
“It looks like the Gulf has all the beans they need for the time being,” Mark Gold, managing partner for Top Third Ag Marketing, said about the Gulf of Mexico, the major export gateway for U.S. soy.
Talk about China’s reserves, “whether it is true or not, has really knocked the wind out of this thing,” he said.
Chicago Board of Trade August soybeans sank 3.8 percent to $14.62-1/2 a bushel, while new-crop November soybeans slid 2.2 percent to $12.60-1/4 a bushel.
August soymeal dropped 2.9 percent to $487.80 per short tonne, pulling back from a contract high of $521. The contract on Monday climbed the daily, exchange-imposed trading limit of $20 as U.S. processors scrambled to find old-crop soy supplies to crush into meal.
Soybean inventories are expected to reach a nine-year low by Aug. 31 due to strong demand and a historic U.S. drought that reduced last year’s harvests.
Moderate temperatures and occasional light rain over the next week to 10 days will aid the corn crop in the U.S. Midwest and boost soybean growth, according to Global Weather Monitoring.
The favourable conditions are arriving just as corn is starting to pollinate, the most important period of development for determining the size of the harvest.
“It couldn’t be better,” Paul Butler, a farmer in Macon, Illinois, said about the weather. “We’re getting perfect rains right where we need them.”
September corn fell 3.4 percent to $5.22-1/2 a bushel, and new-crop December corn fell 2.5 percent to $4.85-1/2.
Food companies, ethanol producers and livestock producers hope a massive harvest will replenish inventories that are expected to drop to a 17-year low by Aug. 31.
The outlook for beneficial weather overshadowed declining crop condition ratings and a sale of 106,400 tonnes of U.S. corn to Mexico, traders said.
The USDA on Monday rated 63 percent of corn as good to excellent as of Sunday, down three percentage points from a week earlier, and 64 percent of soybeans as good to excellent, down one percentage point.
Wheat futures edged lower, with the September contract dipping 0.6 percent to $6.53-3/4 a bushel.