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Soybeans slip on weather, cancelled orders

11/16/2012 @ 3:50pm

U.S. soybean futures fell to a fresh five-month low Friday, pressured by a positive outlook for South American crops and by China canceling previous orders for U.S. soybeans.

Soybean futures for January delivery at the Chicago Board of Trade fell 18 3/4 cents, or 1.3%, to $13.83 1/4 a bushel.

The losses extended a monthslong decline for soybeans. Soybean futures soared to nominal all-time highs in September after the severe U.S. drought widely damaged crops and reduced supply expectations. Prices have since slumped as expectations recovered for the soy crop after rains late in the growing season.

Now, traders are paying increasing attention to the next soy crops being planted in Brazil and Argentina, the world's biggest producers after the U.S. Favorable weather in those countries is further easing concerns about tight global supplies and weighing on soybean prices.

"It's got everybody confused because we've been told for three or four months that the sky's the limit [for soybean prices], that we're going to run out of beans and demand will always be high," said Lon Malmkar, a risk manager at commodities brokerage FuturesOne in Lincoln, Neb. "You reverse it, and down she goes."

Recent rains have eased concerns that some South American soybean regions were too dry, and the weather is likely to remain favorable for soybean crops, said Drew Lerner, president of forecaster World Weather Inc. in Overland Park, Kan.

"Everybody is going to get rain at one time or another over these next two weeks," Mr. Lerner said.

Soybean prices also drew pressure Friday from reports that China has canceled a large amount of orders for U.S. soybeans. Traders said the China National Grain and Oils Information Center, a government think tank, reported that China canceled shipments of about 600,000 metric tons of U.S. soybeans that were scheduled for delivery in December and January. The recent drop in U.S. prices and poor Chinese soybean-crushing profit margins are seen as the drivers for the canceled orders.

On Friday, the U.S. Department of Agriculture reported net export sales of U.S. soybeans of 585,200 metric tons in the week through Nov. 8, mostly for delivery in the current marketing year, which began Sept. 1. The sales were above traders' expectations for sales in a range of 200,000 to 425,000 tons--but the report also revealed canceled sales of 346,200 metric tons for delivery to buyers that weren't identified. Traders typically assume sales to unknown buyers were made to China.

Corn futures reversed losses made on Friday morning to settle higher, after the Environmental Protection Agency decided to deny a request to waive ethanol-blending requirements in the U.S., which could have reduced demand for corn. Corn futures also rose on concerns that prices may have fallen too low to account for drought-reduced tight supplies.

CBOT December corn futures rose 5 3/4 cents or 0.8% to $7.27 a bushel.

Wheat futures fell on continued concern about weak export demand. The USDA last week cut its forecast for U.S. wheat exports in the marketing year that began June 1.

CBOT December wheat futures settle down 7 1/2 cents or 0.9% at $8.38 a bushel, a four-month low for the front-month contract. KCBT December wheat fell 10 1/2 cents or 1.2% to $8.76 a bushel. MGEX December wheat fell 10 1/2 cents or 1.1% to $9.09 3/4 a bushel.

-Andrew Johnson Jr. contributed to this article.
Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 16, 2012 15:48 ET (20:48 GMT)
DJ U.S. GRAIN AND SOY REVIEW: Soybeans Fall on Weather, Chinas Cancelled Orders

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