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Soybeans tumble to 5-week lows

09/20/2012 @ 3:31pm

U.S. soybean futures fell 3% to a five-week low, pressured by global economic worries and the fast pace of the soy harvest in the Midwest.

Soybean prices also fell victim to technical selling as large funds exited positions to shed risk in a commodity that soared to all-time highs this month.

Soybeans for November delivery fell 50 3/4 cents to $16.18 3/4 a bushel at the Chicago Board of Trade.

Soybeans have declined on three of four days this week, and are down 10% from their record intraday high of $17.94 3/4 on Sept. 4.

"When the market falls so fast, people get lulled into selling and it can get ugly in a hurry," said Jason Britt, president of advisory firm Central States Commodities in Kansas City, Mo.

Many commodities Thursday faced losses after signs of economic weakening surfaced in Asia and Europe. Corn futures slipped 1.4%, and wheat edged down 0.2%.

Mr. Britt said the declines in soybeans reflected a market flushing out traders who bought soy futures at $17 a bushel.

Traders have been fearful of fast and furious selling amid a big build-up of bullish bets, or long positions in the market, since midsummer, when the worst U.S. drought in decades took a heavy toll on Midwestern crops.

"Losses or margin calls are good motivations for selling," said Dave Marshall, an independent grain marketing adviser in Nashville, Ill.

Traders on Thursday said nothing had changed from the tight domestic supply outlook and strong demand trends that have supported higher prices this summer. However, seasonal pressure from the harvesting of the U.S. crop that brings more supplies into the market helped tilt prices lower. The pace of the harvest is faster than normal this year, in part because a warm spring caused farmers to plant soybeans sooner than they typically would.

Speculative traders had the assumption that negative price signals on technical charts were telling the market something that the fundamentals haven't, Mr. Marshall said.

The market has been in a period where new buyers haven't surfaced to push prices to new highs despite the continuing strong export pace. Futures were left vulnerable to mass selling, particularly with huge sell orders uncovered after prices dipped below the week's low of $16.30, Mr. Marshall added.

Corn futures fell in unison with sliding soybeans, pressured by harvest weakness and continuing signals that high prices have eaten into demand for corn. Corn is facing a slower pace of exports and ethanol production. Corn for December delivery fell 10 1/2 cents or 1.4% to $7.46 a bushel.

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