A very large, Chinese chicken came home to roost on Thursday. Soybeans got squashed.

Investors have, for month, feared that, with the South American harvest coming online, China would turn further south than the Gulf of Mexico for its soybean purchases.

This is the China which is the world's biggest importer of soybeans, which has been responsible for more than 60% of US exports of the oilseed so far in 2009-10.

Negative exports

Well, official data on Thursday showed the switch may have begun. Weekly US soybean export sales were a negative 115,800 tonnes for 2009-10, meaning not that America had suddenly turned importer but that buyers had ditched previous orders. Many analysts had expected a positive figure twice as big.

"The process has started," US Commodities said.

And this is before South American exports have got in their swing. There are mounting reports of logistical problems getting Brazil's huge crop to port.

US Commodities said: "The infrastructure is poor.  Ports, Railroads, and roads all need help.  It is now taking up to 15-20 days to load a boat.  Producers cannot get trucks as lines are again up to 20 miles [long]."

Crushers shut down 

China had already given the market the jitters overnight by revealing economic data which were worringly robust, in terms of raising market expectations that China would be tempted to throttle back on lending.

This, in turn, would bode ill for consumption of range of commodities, not least soybeans.

Then there are reports of US soybean crushers stopping work because of poor margins. Cargill's plant in Lafayette, Indiana was the latest reported to have started a shutdown.

As if that were not enough for soybeans to deal with, Buenos Aires Grains Exchange dealt them an extra blow at the end of the Chicago trading day by raising its forecast of the Argentine harvest by 1.5m tonnes to 53.5m tonnes.

That trumped the US Department of Agriculture's guess, kept on Wednesday at 53.0m tonnes.

'Ended very poorly'

This batch of bad news was more than enough to overcome the one upbeat development, the passing by the US Senate of a jobs bill, with measures tagged on to reinstate the $1 a gallon tax credit on biodiesel, which accounts for some 11% of US soyoil usage.

"The expected eventual passage of this bill is supportive for the bean oil market but it is already at least partly in the market so don't expect a huge, sudden jump in bean oil prices," Vic Lespinasse said before the opening of play.

That was an understatement. "Soybeans ended very poorly, sharply lower," he said at the end, with funds sellers of an estimated 5,000 contracts of the oilseed with some trading minutes left to go.

The March lot ended down 2.8% at $92.5 � a bushel, its lowest for a month, with the May contract losing 2.9% to $9.30 � a bushel.

Technical factor 

That put the - yet more - losses in grains in the shade, even if wheat made a headline move by closing at its lowest for nigh on five months, at $4.68 � a bushel for March delivery, down 2.25 cents on the day.

The May lot ended 2.75 cents lower at $4.78 � a bushel.

Wheat might consider itself unlucky this time, given that export sales were strong, at 408,000 tonnes.

Still, as Darrell Holaday at broker Country Futures said, technical factors are also in play.

"All of these markets are testing key technical support and if broken it will open the door to more technical selling. Wheat has broke through that support."

Corn got off more lightly, ending unchanged at $4.78 � a bushel for March and down 0.25 cents at $3.65 � a bushel for May delivery.

London dragged lower

London wheat was notably lower too, thanks largely to sterling, which bobbed back above $1.50 against the dollar, and pinned back the euro below �0.91.

March wheat, which had proved relatively resilient of late, slid �2.00 to �92.50 a tonne, with further-ahead contracts showing smaller losses.

In Paris, May wheat lost E1.25 to E121.25 a tonne while, thanks largely to Chicago soybeans,  rapeseed slipped further from the E300 a tonne mark it came so close to last month. The May lot ended down E0.50 at E295.25 a tonne.