Soybeans Fall From Seven-Month High on Europe, China

By Jeff Wilson - Apr 11, 2012
Bloomberg
Soybean futures fell from a seven- month high on speculation that demand will ease in Europe and China, the world’s biggest consumer.

China reported an unexpected trade surplus last month as import growth trailed forecasts. A surge in Spanish and Italian bond yields fueled concern that Europe’s debt crisis is worsening. The oilseed rallied after drought cut crops in South America. Last year, China and the European Union bought 73 percent of global soybean imports.

“Chinese demand for soybeans may not live up to the hype already built into prices,” Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “People are reducing riskier asset holdings because it looks like European debt problems are increasing.”

Soybean futures for May delivery dropped 0.3 percent to close at $14.26 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $14.5225, the highest for a most-active contract since Sept. 1, after the U.S. Department of Agriculture cut its forecast for global output and domestic inventories.

Before the next harvest, stockpiles in the U.S., the world’s top producer last year, will be 9.1 percent less than forecast a month earlier, the USDA said today in a report.

Combined output in Brazil, the second-largest grower, and Argentina, the third-biggest, will drop 11 percent from last season to 111 million metric tons, the lowest in three years, the USDA said.

In the week ended April 3, hedge funds and money managers increased wagers on rallies in soybeans and soybean meal to the highest since at least June 2006.

“There was nothing new on the supply front in today’s report that wasn’t already known,” Don Roose, the president of U.S. Commodities Inc. West Des Moines, Iowa, said in a telephone interview. “We are running out of new speculative buyers without new supply-and-demand fundamentals.”

Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion.