U.S. grains: Soybeans drop as heat-stressed Argentine crop gets rain

Chicago | Reuters — U.S. soybean futures slumped nearly three per cent on Tuesday in the steepest slide since mid-November as forecasts for rain in Argentina eased concerns about hot, dry weather cutting soy crop yields from the major exporter.

Wheat hovered near a recent 3-1/2 year low, anchored by ample global supplies and stiff competition for U.S. grain on the world market. Corn traded on both sides of Friday’s closing price, guided largely by spread trading, and closed slightly higher.

“The market is looking at the Argentine forecast for rains. There are two separate shots expected in the next four to five days and they are seen alleviating some of the heat stress,” said Rich Nelson, chief strategist with consultancy Allendale Inc.

Ample rains expected in Argentina’s agricultural belt over the days ahead should help farmers preserve yields that had been threatened by recent weeks of extreme dry and hot weather.

Argentina is the world’s No. 3 exporter of soybeans and corn, as well as its top supplier of soymeal and soyoil. Drought-like conditions in December took a toll on 2013-14 corn yields while soy has avoided as much damage, thanks to having been planted weeks after corn.

Expectations that some U.S. soybean purchases by China will be switched to South American soybeans also weighed on futures.

U.S. exporters have already shipped nearly 18.8 million tonnes of U.S. soybeans to China, and about eight million tonnes more is sold but yet to ship to the world’s top importer, according to U.S. Department of Agriculture data. A large share of the 3.5 million tonnes in unshipped sales to undisclosed destinations is also believed to be earmarked for China.

Chicago Board of Trade March soybeans fell 36 cents, or 2.7 per cent, to $12.80-1/2 per bushel (all figures US$). Losses accelerated as the contract fell below its 50- and 100-day moving averages.

Commodity funds sold an estimated net 11,000 soybean contracts on the day, the most sold in a single day since late October, according to trade sources.

Soymeal futures fell to a two-month low after posting the sharpest decline in a month as limited U.S. offers for springtime deliveries to East Coast hog producers spurred talk of possible imports from Argentina, traders said.

CBOT March soymeal futures dropped $18.00, or 4.1 per cent, to $416.50 per ton as funds sold an estimated net 4,000 soymeal contracts on the day.

CBOT March wheat fell 1-1/4 cents, or 0.2 per cent, to $5.62-1/4 a bushel. The contract earlier came within 1/4 cent of a 3-1/2 year spot-contract low set on Jan. 10.

The wheat market continued to face headwinds from plentiful global supplies, although the pullback in global wheat prices has stirred fresh demand from buyers.

CBOT March corn ended a penny higher at $4.25 a bushel as traders unwound short corn/long soybean spreads. Earlier pressure in corn was tied to trader unwinding of long corn/short wheat spreads, sources said.

Commodity funds were net buyers of an estimated 3,000 corn contracts on Tuesday and were net even in wheat.

— Karl Plume reports on ag commodity futures for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London, Sybille de La Hamaide in Paris and Naveen Thukral in Singapore.

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