Soybeans declined to a one-month low after China, the world’s largest importer, canceled U.S. purchases for the second time in three days.
China canceled 540,000 metric tons, bringing the total to 840,000 tons since Dec. 18, excluding 120,000 canceled by unknown buyers, the U.S. Department of Agriculture said today. Prices plunged as much as 23 percent since reaching a record on Sept. 4, as prospects for rising output in Brazil and Argentina eased supply concerns after a drought reduced harvests in the U.S., the world’s largest grower and exporter.
“The Chinese appear to be shifting to supplies from South America as weather is looking favorable for big crops in Brazil,” Dave Smoldt, a vice president at INTL FCStone Inc. in West Des Moines, Iowa, said in a telephone interview. “The U.S. purchases were a safety net against a weather problem in Brazil or Argentina. China’s demand is not slowing. It’s just shifting away from U.S. supplies.”
Soybean futures for March delivery dropped 1.8 percent to close at $14.0475 a bushel at 2 p.m. on the Chicago Board of Trade, capping for the first four-day decline since Nov. 12. Earlier, the oilseed touched $13.9775, the lowest since Nov. 20. Trading in soybean futures was 74 percent higher than the 100-day average for the time of day.
While U.S. farmers saw production plunge for a third straight year, after the worst drought in more than seven decades, global output will increase almost 12 percent to a record in the year ending Sept. 30, the U.S. Department of Agriculture said Dec. 11. Brazil, which is forecast to overtake the U.S. as the top exporter, will boost its harvest by 22 percent, and Argentina’s will expand 34 percent, the USDA said.
As much as 3 inches (7.6 centimeters) of rain will fall in southern Brazil during the next two days, with more rain in much of the major growing region through Jan. 4, maintaining favorable conditions, World Weather Inc. said in a report today. Drier weather is reducing soil moisture in parts of northeastern Brazil, a relatively minor producing region, the private forecaster said.
Rain may boost Brazilian production to a record 81.5 million metric tons in the marketing year that begins Feb. 1, up from 81.3 million forecast in November and 67.7 million harvested this year, Abiove, a soy-processors’ group, said yesterday. The U.S. crop, which farmers have already harvested, slipped to a four-year low of 80.86 million tons, according to the USDA.
Some fields from Nebraska to Indiana received more than an inch of moisture in the form of rain or snow during the past 24 hours, data from the National Weather Service shows. About 55 percent of the nine-state Midwest region was in moderate to exceptional drought condition as of Dec. 18, up from 14 percent a year earlier, according to the U.S. Drought Monitor. Prices reached a record $17.89 on Sept. 4, boosting costs for makers of soy-based animal feed and cooking oil.
“Recent U.S. moisture and favorable South American weather may be exerting greater influence on futures than previously perceived, especially with China soybean buying topping out,” Richard Feltes, the vice president of research at R.J. O’Brien & Associates, said in a report today.
Soybeans are the largest U.S. crop after corn, valued at $35.8 billion in 2011, government figures show.