Not since June have buyers been able to purchase soybean futures for a figure beginning
They could again on Monday, as weak export data spurred more
sales from investors whose net long position in Chicago soybean futures and options
remains relatively large, at nearly 177,000 contracts for the speculative, or "managed
money", according to latest regulatory data.
"The general feel in the ag sector is that corn and soybeans are still trading
like markets that simply have too much speculative length," Brian Henry at
Benson Quinn Commodities said.
For corn, speculators' net long position is also a relatively
strong 260,000 contracts.
Mr Henry added: "These markets may have value near these
levels, but the commercial/end user has not had to shift away from securing
coverage on their own terms," as funds sells turn the market in buyers' favour.
Weak import data
The soybean export fears relate to data on Friday showing
sales to foreign buyers at 500,000 tonnes in the latest week.
Sure, this is still well on pace to meet revised US targets
for shipments in 2012-13, reaching nearly 70% of the full-year total less than
two months in.
The data were also for a week when China, the top soybean
importer, was on holiday. And there have been plenty of rumours around of fresh
Chinese buying of US supplies, with talk of purchases of a dozen cargoes or
However, the market has often heard this kind of speculation
before, only to find it unconfirmed, or confirmed only in smaller sizes than
"There is lots of talk about China buying beans on this
break - we'll see if that happened in the next export sales updates," Mike
Mawdsley at US broker Market 1 said.
Chinese imports rise
In fact, actual Chinese soybean imports reached 5.0m tonnes
last month, a 12.4% rise on the August figure, weekend data showed, part of a
slew of statistics released by China which might have appeared positive.
China's trade surplus for September exceeded forecasts,
thanks to a 10% rise in exports year on year, signalling that foreign demand
may not be as weak as many investors had believed.
China's inflation eased to 1.9% year on year in September, from
2.0% in August, potentially giving Chinese authorities more elbow room for
monetary policy measures to boost the world's second largest economy.
However, the data failed to boost broader markets, leaving
Asian shares a touch lower,
including a 0.3% drop in Shanghai itself, while the safe haven of the dollar added 0.3%.
'Very strong system'
As an extra negative to soybean prices, much of South
America is receiving rains needed for crop sowings
"Weather models continue show a very strong system which is
approaching the north coast of Chile moving across central and eastern
Argentina over the next three days," WxRisk.com said, with further heavy rains
due in a week or so.
Sure, the rains do not look like reaching the central
Brazilian areas which represent major soybean territory, and are proving too
much for many Argentine farmers struggling to plant corn.
But any delay to corn seedings is expected to prompt many
growers to switch to soybeans, which are generally later sown.
Chicago soybeans for November dropped to $14.95 a bushel in
early deals, the lowest since late June at a 1.8% decline on the day, before
recovering half a cent as of 09:20 UK time (03:20 Chicago time).
That was a bigger drop that the 1.2% to $7.44 a bushel in December
corn, also sapped by soft US export data.
Indeed, any boost to the crop from Argentine growers
switching from corn to soybeans was more than offset by the continuing hangover
from Friday' data showing 4,200 tonnes of US corn export sales in the latest week.
Indeed, there is talk of further US imports of the grain,
with east coast buyers said to have bought 600,000 tonnes of the grain from
Argentina for November/December delivery.
"Whether rumour or fact, the steady decline in exports and
likely increase in imports into the US will help alleviate some stress on the
current balance sheet," Benson Quinn's Brian Henry said.
"The USDA currently has 75m bushels pegged for US imports in
2012-13. Seeing that number increased to 100m bushels seems feasible, but much
beyond that may be difficult," if only for logistical reasons.
Wheat did the best of Chicago's big three, helped by weather
fears for Australia expanded to include frost as a well as drought.
"Local crop concerns may again come to the fore once after
much of New South Wales received its coldest consecutive October mornings in over
10 years over the weekend," Commonwealth Bank of Australia's Luke Mathews said.
"Frosts at this time of the year have the potential to cause
significant yield losses to wheat crops."
'Rain outlook is poor'
Furthermore, "despite light showers over the weekend, inadequate
October rainfall means Western Australia yield potentials have trended lower
over the past fortnight.
"The rain outlook is also poor."
Indeed, weather service WXRisk.com said that "the weather
models continue to show a massive heat dome dominating all of central north
central and north western Australia.
"The problem is that this features so huge it is force the
jet stream well to the south and as result weather systems are bypassing south western
and south eastern Australia.
"Over the next 10 days none of these areas even on the coast
sees rainfall over half an inch."
Chicago wheat for December eased 0.3% to $8.54 a bushel.
Among soft commodities, New York cotton continued its price revival, adding 0.1% to 71.45 cents a pound
for December, despite worsened supply and demand fundamentals as suggested in last week's USDA Wasde crop report.
The department also indicated that "just 46% of the cotton
harvested so far this season meets the delivery standards of the New York futures
"This is well below the historical average of around 70%."
Back among oilseeds, Kuala Lumpur palm oil dropped 2.8% to 2,429 ringgit a tonne, as disappointment at Malaysia's move to rejig export taxes offset some better trade data.
Malaysian palm exports rose 13% in the first half of October, Intertek Testing Services said.