Soyabeans fall

US soyabean futures dropped 1.8 percent on Wednesday on worries about waning demand from China, the world's top buyer of the oilseed. Traders said there was talk that China had backed out of previously agreed purchases of both US and Brazilian soya supplies, which could leave a glut of soyabeans on the market. There was no confirmation of any cancellations.
"Demand has clearly weakened and this has given rise to talk of Chinese cancellations," said Sterling Smith, Citigroup market strategist. The weakness in soyabeans forced investors to back out of some long soyabean/short wheat spreads they have built up in recent months, contributing to a 3.3 percent gain in wheat prices. The front-month Chicago Board of Trade soft red winter wheat contract topped out at its highest since October 30. "It is unwinding of inter-market spreads," said Tom Fritz, partner with EFG Group in Chicago. For the longest time, guys were short wheat and long corn, long beans. So you are getting out of that."
The wheat market received additional support from uncertainty about whether the political upheaval in Ukraine will disrupt shipments from that key exporter. CBOT oats also soared, rallying 17 percent to an all-time high due to severe logistical problems that have snarled traffic on Canadian railroads, slowing shipments from the top exporter of the grain. CBOT May soyabeans settled 26 cents lower at $13.87 a bushel. The front-month contract hit its lowest since February 21 during Wednesday's session.
Soyabeans have fallen for three consecutive days, shedding 5.2 percent, following the release of worrisome economic data from China that raised questions about its appetite for soyabeans. "The hedge funds have lost faith in the China story, thinking their economy is in the tank, and their bean longs have been a big part of that story," Charlie Sernatinger, analyst with ED&F Man Capital, said in a note to clients. Market watchers had long expected that China would renege on some US purchase agreements as cheaper supplies from Brazil and Argentina arrived at export ports following harvest.
But the market had not factored in the possible cancellation of some Brazilian deals. CBOT May wheat, which surged through its 200-day moving average early in the session, was 24-3/4 cents higher at $6.83-3/4 a bushel. CBOT corn for May delivery was up 5-1/4 cents at $4.88-1/2 a bushel.