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Slow China growth trips up soybeans

04/15/2013 @ 10:24am

U.S. soybean futures are trading lower Monday, succumbing to broader selling pressure across commodities markets amid worries about slowing growth in China.

Chicago Board of Trade soybeans for May delivery recently were down 1/2 cent, or 0.04%, at $14.12 1/2 a bushel. November soybeans were down 7 3/4 cents, or 0.6%, to $12.24.

Traders are shedding risk in commodity markets from precious metals to crude oil to oilseeds.

"There is a general perception in the market that China, one of the largest importers of raw materials, will slow their imports of commodities due to declining economic conditions," said Rich Nelson, director of research at brokerage Allendale Inc. in McHenry, Ill.

Still, Mr. Nelson noted, weaker economic growth in China hasn't historically affected its soybean consumption, indicating Monday's losses are more closely linked with general selling across asset classes.

Gross domestic product in China grew 7.7% in the first quarter compared with a year earlier. This was weaker than the fourth quarter of last year and below economists' expectations of 8%.

Market watchers say traders running for the exits in metal and energy futures sparked selling in grain and oilseed markets.

"New crop" soybean futures--those for delivery after this fall's harvest--are displaying the sharpest losses.

Traders are factoring in the potential for substantial increases in U.S. soybean production this year, especially with plenty of moisture currently replenishing soils for crops that faced the worst drought in decades last year.

Soybeans are also drawing pressure from new reports of bird-flu cases in China, said Mike Zuzolo, president of Global Commodity Analytics and Consulting in Lafayette, Ind.

The bird-flu outbreak brings into question China's demand for soymeal, a key source of feed for the country's poultry industry, Mr. Zuzolo said. China, the world's largest importer of soybeans, imports soybeans to produce soymeal and any cutbacks in poultry production would reduce demand for the feed.

Still, losses in soybean contracts for near-term delivery remain limited, as the market has to continue rationing demand in order for domestic supplies to remain adequate until the next harvest in the fall.

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT. The National Oilseed Processors Association will release its monthly report on soybean crushing at noon EDT.


Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
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(END) Dow Jones Newswires
April 15, 2013 10:25 ET (14:25 GMT)
DJ Soybean Futures Edge Lower Amid Weakness Across Commodities->copyright


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