Chicago | Reuters — U.S. soybean futures dropped Monday after the U.S. Agriculture Department made smaller-than-expected cuts to domestic stockpile and South American crop production forecasts, traders said.
Corn futures also sagged, dropping 2.2 per cent from the six-month high hit last week, after USDA raised the global supply view. The declines in corn weighed on wheat, which dropped on profit taking after hitting a three-month high.
“It was not a bearish report, but it was a disappointing report,” said Dewey Strickler, president of Ag Watch Market Advisors. “You had a lot of liquidation here today.”
Soybean futures fell 2.7 per cent, their biggest loss since Jan. 21. Traders said the report gave investors who had built up long positions as the market rallied to six-month highs during the past month an excuse to cash out.
“The numbers were pretty neutral all around, but after the big run-up in price, ‘neutral’ is ‘negative,’ as the bull needs to be fed,” said Charlie Sernatinger, analyst with ED+F Man Capital. “There isn’t much to say, other than we have a lot of new longs in on the rally, and they are taking some profits.”
Chicago Board of Trade soybeans for May delivery settled down 39 cents at $14.18-3/4 a bushel (all figures US$).
Traders noted the soybean market faced additional pressure from concerns about disappointing economic data out of China, the world’s biggest buyer of the oilseed. There also was talk China was looking to back out of some deal to buy Brazilian soybeans but there was no confirmation.
“You have everything bearish today in beans, you have the basis in Paraguay off really hard, China markets down almost three per cent, and the soymeal has had cracks in it,” said Gordy Linn of The Linn Group brokerage.
USDA pegged U.S. ending stocks of soybeans at 145 million bushels for the 2013-14 crop year, down just five million bushels from its February estimate. Analysts, on average, had been expecting the report to show domestic ending stocks of 141 million bushels.
The government also left its forecast for the Argentine soy crop unchanged at 54 million tonnes and its 1.5 million-tonne cut to its Brazilian crop projection was smaller than expected.
“USDA probably is dragging their feet on trying to get the world and U.S. soy ending stocks down to where the market thinks they are,” said Mike Zuzolo of Global Commodity Analytics.
CBOT May corn was 10-3/4 cents lower at $4.78-1/4 a bushel, closing just above its session low. The front-month contract notched its biggest daily decline since Jan 8.
USDA raised its world ending stocks figure for corn to 158.47 million tonnes, topping analysts estimates by 2.2 million tonnes. But its cut to domestic corn stocks surprised investors who had expected the government to boost its supply outlook for the grain.
CBOT May wheat fell 13-1/4 cents to $6.40-3/4 a bushel. USDA left its outlook for wheat ending stocks unchanged at 558 million bushels.
— Mark Weinraub is a Reuters correspondent covering ag commodity markets from Chicago.