November 13, 2012
Grain futures tumbled amid a wave of technical selling on Monday, with soyabeans sinking to a 4-1/2-month low that nearly erased gains from this summer’s devastating drought. Prices were already under pressure after the US Department of Agriculture on Friday raised its estimate for US soyabean production more than expected and increased its forecast for global inventories.
Monday’s technical selling pushed soyabeans down 21 percent from their all-time high just over two months ago. When a market drops more than 20 percent over at least two months, it is considered to have gone beyond a correction and become a technical bear market.
Most actively traded January soyabeans fell 3.1 percent to $14.07 a bushel on the Chicago Board of Trade by 10:40 am CST (1640 GMT). Front-month November soyabeans lost 2.9 percent to $14.09-1/4 a bushel.
Soyabean futures began a rally linked to the worst US drought in more than 50 years in earnest on June 15 at $13.86 per bushel, and hit a record high of $17.94-3/4 on September 4. The USDA, in a monthly supply-demand report on Friday, told traders that crop losses from the drought were not as severe as previously thought. The department pegged US soyabean production at 2.971 billion bushels, up from its October estimate of 2.86 billion and above the 2.892 billion predicted by analysts. Following the USDA report, Goldman Sachs cut its three-month price forecast for soyabeans to $15.50 from $16.50 and its six-month outlook to $17.25 from $18.75.
Speculators have exited the soya market recently amid expectations of an improved supply outlook. Goldman also cut its three-month forecast for corn prices to $8.25 a bushel from $9 and its wheat price forecast to $9.50 from $10.25. December CBOT wheat fell 3 percent to $8.59-3/4 a bushel while December CBOT corn dropped 3.4 percent to $7.14 a bushel.