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Evening markets: China sale sends beans tumbling

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Chicago crops took a little time to react to news that China was to sell some of its grain stockpiles. But react they did.

Chicago's benchmark August soybean contract, which had initially showed little reaction to reports of China's 500,000-tonne sale of the oilseed, stood 33.5 cents, or 3.3%, lower at $9.87 ¼ a bushel at 16:00 GMT.

Earlier, the contract touched $9.80 a bushel, the lowest for a nearest contract for three months.

'Negative impact'

September corn, meanwhile, was 6 cents down at $3.23 ½ a bushel, after setting a year low of $3.22 a bushel earlier.

China is to put 2m tonnes of corn up for sale.

"This news had a negative impact on our grain prices," Vic Lespinasse, the GrainAnalyst.com analyst, said.

However, he echoed comments made by some other observers earlier that China was selling at uncompetitive prices - $549 a tonne for soybeans, the equivalent of nearly $15 a bushel.

"It would be more accurate to say the [Chinese] government is going to try to sell this grain, as their prices might be too high to attract many buyers," Mr Lespinasse said.

Indeed, some traders said that the real problem with China's sale was that it might signal an end to stockpiling of US grains, rather than the auction itself.

Argentina tax concession?

Meanwhile, other observers believed additional factors may have been at work, such as the prospect of good pollination weather for the US corn crop, and mounting expectations that Argentina is on course to lower its soybean export tax, a move which would encourage its farmers to produce more in competition with their American peers.

The latest talk has it that Argentina's House of Representatives will meet on August 10 to consider a cut in the levy.

In fact, wheat, of which Beijing is to sell 750,000 tonnes, sailed on upwards, adding 8 cents to $5.42 ¾ a bushel for Chicago's September contract.

Near-term wheat has now bounced 12% from its year-low hit last week.

European crop update

Technical considerations may have had something to do with the grain's strength, with some speculators playing a long wheat-short corn trade. Others were covering shorts, Mr Lespinasse said.

However, a report from Strategie Grains, the French analysis group, warning of potential rain damage to the quality of European wheat may have helped, given the strong demand by millers for high-class wheat, which the US crop looks like providing.

Indeed, the Strategie Grains report may have been better for US than local prices, adding that by quantity the European soft wheat crop would be 200,000 tonnes better than previous forecasts.

London wheat for November dipped £1.15 to £112.35 a tonne, with its Paris equivalent off E1.00 at E143.50 a tonne.

Cocoa disease threat

Among softs, juice finally took a step back towards earth, after its 34% surge between July 2 and its close at a 10-month high on Wednesday.

Profit taking was blamed for a 0.9-cent drop to 101.95 cents a pound in New York's September contract.

Meanwhile, cocoa sipped 1.5% to $2,676 a tonne for New York's September contract, and 1.0% to £1,707 a tonne for the London equivalent, ahead of North American grind data expected to show a drop of 10-11%.

Nonetheless, fears in Ivory Coast of an outbreak of black pod disease, following recent heavy rains, are significantly serious that authorities have launched a campaign to spray plantations, according to reports.

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