US soybean futures on the Chicago Board of Trade closed lower the 50-cent trading limit on Wednesday on follow-through pressure from recession fears amid sinking financial markets, traders said. The Dow Jones industrial average was down about 200 points during most of the CBOT trading session on US economic jitters, then bounced higher after the Chicago markets closed.
"The concerns about the economy are real," said Anne Frick, analyst with Prudential Financial. March soybeans locked limit-down at $11.89-1/2, with the spot market falling to its lowest level since late December. New-crop November soy settled 50 cents lower at $11.67-1/2. After the limit decline halted trade in futures, traders turned to the options mart. Late options trade indicated that March soy was down 51-1/2 cents at $11.88 and November soy was down 57-1/2 cents at $11.60.
Midwest cash dealers were posting 10 cents per bushel protection on soybean basis bids on Wednesday afternoon, expecting a lower CBOT electronic open at 6 pm CST.
The products also closed lower given the economic worries. The front five months in soybean oil closed down the 2-cent limit, with March soyoil at 49.68 cents per lb. Soymeal was the only leg of the complex that did not fall its daily trading limit - $20 per ton - but neared it. March soymeal settled $14.10 per ton lower at $322.80; deferreds were down $12 to $14.80.
Commodity funds were liquidating long positions, selling about 9,000 soybean contracts, 3,500 soymeal and 5,000 soyoil, traders said. Even without the recession jitters, the CBOT grain and oilseed markets were poised for a technical setback after rising to record highs since the first of the year. Commodities were attractive to Wall Street speculators as an inflation hedge amid outlooks for strong demand for grains and soybeans, traders said. There was talk among Chicago floor traders that the drop in futures sparked fresh soybean sales to China - four cargoes of US soybeans and five cargoes out of Brazil.
Also supportive was a drier outlook this week for Argentina, the No 3 soybean producer. The corn and soybean belt will be dry or see a few light showers through Friday, said a DTN Meteorlogix forecaster. Scattered showers of 0.10 to 0.50 inch were expected on Saturday, which is down from an earlier forecast for 0.30 to 1.50 inches.
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