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Profit-taking slams soybean futures

06/13/2013 @ 3:08pm

U.S. soybean futures slumped Thursday, with investor profit taking pressuring prices lower.

Chicago Board of Trade soybeans for July delivery finished down 30 1/2 cents, or 2%, at $15.10 1/4 a bushel. The November soybean contract settled down 13 3/4 cents, or 1%, to $13 1/2.

Investors took profits on signs of slowing demand after prices rallied to seven-month highs earlier in the week.

"With Wednesday's crop report in the rearview mirror, Thursday's weekly export sales report set a negative demand tone for the market," said Mike Zuzolo, president of Global Commodity Analytics and Consulting in Lafayette, Ind.

Prices have been buoyed for months by tight near-term supplies in the U.S., but signs have emerged that high futures prices and strong cash prices for physical supplies are cooling demand and pushing some buyers to shift their purchases to cheaper supplies more readily available later in the year.

Soybeans have been a demand-driven market, and without any fresh demand news to attract buyers, investors booked their gains, Mr. Zuzolo said.

The U.S. Department of Agriculture reported Thursday that net weekly soybean export sales totaled 480,600 metric tons, which included net sales of 447,100 metric tons for the next marketing year that begins Sept. 1.

"It's apparent that export demand is not holding up, and the USDA did not inject any new bullish facts into the equation in Wednesday's crop reports to encourage new buying," said Bill Nelson, analyst with Doane Advisory Services in St. Louis.

"After a steep run up in prices, the market was showing some signs of exhaustion," Mr. Nelson said. "Traders are still concerned about planting delays and tight stockpiles, but those are old facts that everyone is aware of."

Meanwhile, "new crop" futures, such as the November contract, that represent crops currently being planted across the Farm Belt to be harvested in autumn fell as traders factor in the potential for substantial increases in U.S. and world production this year.

Goldman Sachs lowered its price forecasts for U.S. corn and soybeans over the next 12 months, saying that domestic supplies will grow unless there is "a significant weather shock."

The firm set its three-, six- and 12-month corn price forecast at $4.75 a bushel, which it said was down from a prior forecast of $5.50. It lowered its forecast for soybeans during that time period to $11 a bushel. While the firm didn't specify its prior forecast, a May research note had projected soybean prices at $12.50 a bushel.

U.S. corn futures finished lower, pressured by falling soybean prices and worries about weak corn export demand. Corn and soybean prices influence each other because the two crops compete for planted acreage in the U.S. and elsewhere.

CBOT corn for July delivery finished down 5 1/2 cents, or 0.8%, at $6.45 1/4 a bushel. The December contract settled down 1 cent, or 0.2%, to $5.36 1/2.

U.S. wheat futures ended higher, reversing early declines, as traders shed some risk after recent declines.

July wheat futures ended up 2 1/2 cents, or 0.4%, at $6.85 1/2 a bushel at the Chicago Board of Trade. Kansas City Board of Trade July wheat climbed 2 cents, or 0.3%, to $7.18 1/2 a bushel. MGEX July wheat finished up 5 3/4 cents, or 0.7%, at $8.12 a bushel.


Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
June 13, 2013 15:06 ET (19:06 GMT)
DJ Soybean Futures Fall, Profit Taking Lead Prices Lower->copyright


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