Soybean prices tumbled, dragging grains lower too, after
China unveiled its biggest cancellation of import order since at least the
1990s, fuelling fears over demand from the top soybean importing-country.
However, prices subsequently pared losses amid ideas that move
may have been little more than an accounting trick.
Soybean futures for March tumbled 2.3% back below $14 a
bushel after the US Department of Agriculture revealed that China had scrapped
purchases of 540,000 of US soybeans.
The cancellation by the world's top soybean importer represented
the largest since at least the 1990s.
And it followed the ditching of a further 300,000 tonnes in
orders earlier in the week by Chinese buyers, plus a further 120,000 tonnes
scrapped by an unknown importer, which many believe was China too.
'Effort to manipulate prices'
The cancellations stoked concerns over Chinese demand which have
been given extra weight by declines in futures on the country's own Dalian
exchange, where soybeans have dropped by 2.0% in the last two sessions, soyoil
2.5% and soymeal 3.2%.
However, Roy Huckabay, executive vice-president at broker
Linn Group, said that there may be more to the Chinese move than first appears,
with the cancellations potentially relating to a loose contract signed early in
the year, rather than conventional orders.
A Chinese delegation in February signed an agreement to buy 13.4m
tonnes of soybeans in a contract which does not technically count as a sale,
but typically leads confirmed deals.
"When China needs something to bring soybean prices down, it
can cancel some of these orders," Mr Huckabay told Agrimoney.com
Thursday's cancellation appears "just an effort to
manipulate prices", rather than representing a ditching of underlying physical
Indeed, the USDA separately on Thursday, in a much-watched
weekly export sales report, announced fresh orders of soybeans by China,
totalling 474,200 tonnes.
"Even with today's cancellations factored in, Chinese still
has 193m bushels (5.3m tonnes) of soybean orders left on the books," Mr Huckabay
Chicago soybeans for March stood at $14.08 ¼ a bushel, down
1.6% on the day, in late morning deals.
Chicago corn for March stood at $6.95 ¼ a bushel, down 1.1%
on the day, but half the losses chalked up earlier, when the lot fell to a
five-month low of $6.87 ½ a bushel.
Chicago wheat for March stood at $7.90 ¾ a bushel, down 1.9%
on the day, but above an intraday low of $7.82 ½ a bushel, the lot's weakest
Weakness spread to foreign markets too, where January canola
dropped to Can$572.20 a tonne in Winnipeg at one point, the lowest price in
nearly 10 months.
In Paris, rapeseed for February dropped to E441.75 a tonne,
a price not seen since the first trading day of 2012, before recovering some
ground to close at E446.25 a tonne, a decline of 1.1%.