Speculative selling sinks soybeans
U.S. soybean futures tumbled 3% to five-month lows Monday, as selling continued after a government forecast for a bigger U.S. soy crop.
Grain futures fell along with soybeans Monday, pressured by speculative market participants selling futures to exit earlier bets on higher prices.
A lack of news forced traders to revert back to Friday's larger-than-expected supply forecasts for soybeans, said Dave Marshall, an independent grain marketing advisor in Nashville, Ill.
"Monday was a get-me-out-of-the-market trading environment," Mr. Marshall said.
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Soybean futures were still reeling in the wake of Friday's larger-than-expected production and stockpile forecasts from the U.S. Department of Agriculture.
The USDA report showed that "U.S. and global soybean markets remain in deficit but that risks of critically tight soybean inventories continue to fade quickly," Goldman Sachs analyst Damien Courvalin said in a research note.
Goldman Sachs on Monday said it had cut its price forecasts for soybeans, corn and wheat. The bank cut its three-month soybean price forecast to $16.50 a bushel from $18.75, after the USDA on Friday raised its estimate for the U.S. soy crop this year by more than analysts had expected.
The Goldman Sachs forecast added to an already negative price theme Monday. "The Goldman data was a great excuse to cling to when you are looking for reason to sell," said Arlan Suderman, senior market analyst with Water Street Solutions in Wichita, Kan.
Traders said a breakdown of technical support on charts was a signal to speculative traders to exit bets prices would rise. Investors found it hard to stand against the winds of selling pressure once chart support levels were violated.
Many traders, particularly fund managers, live and die by technical charts, Mr. Marshall said.
Speculative funds have traded the soy-drought story for the last three months and are ready to move on to another undervalued asset, Mr. Suderman said. "This was particularly the case for fund managers in an environment of uncertainty with the U.S. fiscal cliff in question and the global economy in doubt," Mr. Suderman said.
Chicago Board of Trade soybeans for November delivery settled down 41 cents, or 2.8%, at $14.11 a bushel. Soybeans for January delivery finished down 46 1/4 cents, or 3.2%, at $14.05.