January 10, 2013
US soyabean futures slumped Tuesday on projections that larger-than-expected harvests in South America will reduce demand for the US crop, while corn futures edged higher. Brazil’s government crop agency, Conab, on Wednesday is expected to increase its estimate for the soyabean harvest to a new record due to favourable weather, said Mike Zuzolo, president of Global Commodity Analytics & Consulting.
Conab last month pegged Brazil’s crop at 82.6 million tonnes, above the US Department of Agriculture’s latest estimate of 81 million tonnes. The USDA will release major reports of its own on Friday on global supply and demand and US quarterly grain inventories. The department is expected to bump up its outlook for Brazil’s soya harvest by 0.9 percent from last month to a record-high 81.8 million tonnes, according to a Reuters poll.
Traders were taking profits ahead of the reports, Zuzolo said. Trading has been particularly volatile following USDA’s January supply-and-demand and inventory reports, with corn making limit moves on the day of the release six years in a row. The “natural tendency for risk aversion” lead traders to even up positions leading into the major data release, said Jim Gerlach, president of A/C Trading.
“You’re going into a major crop report, you’ve seen a substantial break in prices, and these reports tend to be game changers,” he said. Chicago Board of Trade March soyabeans ended down 2 cents, or 0.1 percent, at $13.86-1/2 a bushel. CBOT March corn rose 3-1/4 cents, or 0.5 percent, to $6.88-3/4 a bushel, while March wheat lost 3/4 cent, or 0.1 percent, to $7.50-1/2.
Traders were waiting to see how the USDA adjusts its estimates for soyabean and corn production in South America, as Brazil and Argentina compete with the United States for export business. Global demand for corn increased on Monday following a lull in activity over the winter holidays and a decline in prices. South Korea’s Major Feedmill Group (MFG) bought a combined 137,000 tonnes of corn for arrival in May, while the Korea Feed Association (KFA) bought 110,000 tonnes of corn likely to be sourced from South America, traders said.
A group of private Israeli buyers issued separate international tenders to purchase 135,000 tonnes of corn and up to 50,000 tonnes of feed wheat of option origin, traders said. “It is interesting to see they are buying a little bit,” said Rich Nelson, chief strategist for Allendale.