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Soybeans sink, corn climbs

04/24/2013 @ 2:25pm

U.S. soybean futures slumped Wednesday, with nearby contracts declining as traders took profits on prior gains.

Chicago Board of Trade soybeans for May delivery settled down 15 3/4 cents, or 1.1%, at $14.04 a bushel. November soybeans finished down 2 1/2 cents, or 0.2%, to $11.93 3/4.

The soybean market reversed early gains as traders took some profits in spot-month May futures as first notice day approached for the contract.

"We are seeing traders liquidating positions in the May contract, as they prepare for the contract to head into its delivery phase," said Dave Marshall, a grain marketing adviser for TCFG LLC in Nashville, Ill.

Traders holding positions in the May contract beyond next Monday may be subject to having to deliver physical stockpiles of soybeans against the contract, an outcome most speculative traders attempt to avoid.

Market watchers say traders that bet on nearby contracts rising and "new crop" contracts that represent crops that will be harvested in the fall have done extremely well and took some profits off the top.

There has been a huge disconnect between futures and cash markets, reflecting historically high cash-basis levels. The disconnect between cash and futures has kept nearby contracts strong, as end users from processors, livestock feeders to exporters have been forced to pay large premiums for physical supplies amid the tight availability of domestic inventories. "Basis" refers to the gap between futures and cash prices for physical soybeans.

"New crop" futures, or contracts that represent crops that will be harvested in the fall, declined amid expectations that U.S. production will increase significantly this year. The November contract is drawing added pressure from worries farmers who are unable to plant corn because of planting delays may switch some acres to soybeans, which have a later growing season.

Corn futures finished higher, recovering from an early slide to two-week lows. The corn market had fallen in prior sessions, as traders factored in the potential for farmers to aggressively plant corn as fields dry from recent rains in the Midwest next week.

However, the uncertainty about weather kept traders cautious about pushing prices lower, with some end users viewing the lower prices as a good opportunity to secure some supplies in the event that planting delays persist, said Shawn McCambridge, senior grains analyst with Jefferies Bache in Chicago.

CBOT May corn ended up 1 cent, or 0.2%, at $6.39 1/2.

Wheat futures finished mixed Wednesday, drawing modest pressure from expectations for world wheat supplies to be ample this year, and traders' views that drier weather next week may allow for more planting of spring wheat in the upper Midwest.

May wheat futures ended down 5 3/4 cents, or 0.8%, at $6.91 3/4 a bushel at the Chicago Board of Trade. Kansas City Board of Trade May wheat rose 1 3/4 cents, or 0.2%, to $7.39 a bushel. MGEX May wheat finished up 2 1/2 cents, or 0.3%, at $8.17 3/4 a bushel.

Write to Andrew Johnson Jr. at
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April 24, 2013 15:13 ET (19:13 GMT)
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