Soybeans Extend Weekly Loss on Concerns for Chinese Cancellation

By: Bloomberg

Soybeans fell, heading for the biggest weekly loss in more than five months, on signs of slowing demand from China, the world’s top importer. Wheat rose, erasing earlier declines.

China has delayed shipping about 500,000 metric tons of soybeans, with crushers asking suppliers to change March and April cargoes to June and July, according to a Bloomberg News survey of five crushers, traders and researchers in China. The cargoes are mostly from Brazil, according to the survey. Processing soybeans into animal feed became unprofitable this month in China, according to Shanghai JC Intelligence Co., while hog prices fell and demand from poultry farms dropped amid bird flu outbreaks.

"The oilseeds complex remains extremely volatile with large price swings a seemingly daily occurrence," said Jonathan Lane, trading manager at Gainsborough, England-based Gleadell Agriculture Ltd., in an e-mailed note. "Chicago soybeans have been sold off heavily with the market anticipating imminent Chinese cancellations."

Soybeans for delivery in May dropped 0.4 percent to $13.9125 a bushel at 5:36 a.m. on the Chicago Board of Trade. That would leave prices 4.6 percent lower this week, heading for the biggest decline since the week to Sept. 20.

Brazil’s Production

Chinese demand and concern about production losses in Brazil, the top exporter, helped spur a 7.6 percent increase in soybean futures this year. The U.S., the second biggest shipper, sold 27.8 million tons of soybeans to China since the marketing year began Sept. 1, with 1.87 million tons still waiting to be shipped as of March 6, U.S. Department of Agriculture data show.

Wheat for May delivery rose 0.1 percent to $6.7425 a bushel after earlier dropping as much as 0.6 percent. The price climbed to $6.965 yesterday, the highest since Oct. 25, before ending 1.5 percent lower. In Paris, milling wheat for November delivery fell 0.4 percent to 202 euros ($281) a ton on NYSE Liffe.

Wheat entered a bull market this week in Chicago on expectations demand for U.S. supplies will rise amid concern that cargoes from the Black Sea region may be affected by the crisis in Ukraine. The grain is up 11 percent this year and on course for a second weekly advance.

Ukraine’s Crimea region is set to hold a referendum on March 16 on whether to join Russia. Any halt of grain shipments from ports in Crimea will have little impact on Ukraine’s total exports, Dmitry Rylko, director of Moscow-based Institute for Agriculture Market Studies, said in an e-mail yesterday.

Corn for May delivery fell 0.4 percent to $4.8325 a bushel in Chicago. The grain headed for a 1.2 percent decline this week, the first such loss since the week ended Jan. 17.

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