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Macro worries drag grains lower

05/30/2012 @ 3:28pm

U.S. soybean futures closed lower Wednesday, pressured by macroeconomic worries and forecasts for rain in the U.S.

Soybeans still have a tight supply-demand outlook, but outside markets and technically driven profit-taking pushed down prices, traders said.

Chicago Board of Trade soybeans for July delivery ended down 13 1/2 cents, or 1.0%, at $13.73 1/4 a bushel. November soybeans fell 1/2 cent to $12.93 a bushel.

July soybean meal fell $2.60 to $409.90 a short ton, and July soybean oil fell 0.48 cent to 49.69 cents a bushel.

Worries about the health of Spanish banks renewed concerns about the euro zone's debt crisis, leading investors Wednesday to seek safe havens and avoid riskier commodities. Equities and crude oil traded lower Wednesday, and the dollar was stronger.

"It's a risk-off headline day," said Dan Basse, president of advisory firm AgResource Company in Chicago. "The market is paying attention to the financials."

Updated rain forecasts for much of the Midwest this week may also have pressured futures, traders said.

"If you look at the rain event's direction, it seemed to go a little bit more toward the Delta, the southern part of the Midwest, areas where there are double-crop beans," said Jerry Gidel, an analyst with Rice Dairy. Analysts expect more U.S. farmers than usual to "double-crop" their fields this year, planting soybeans immediately after harvesting wheat.

Also pressuring soybeans, a slower flow of soybean export-sale announcements in the last two weeks has raised concerns about lower demand.

But analysts still expect soybean supplies to tighten as demand continues to grow, especially from China. Analysts are concerned about dry soil and poor emergence for recently planted soy crops in the U.S., and say more rain will be needed after this week for the crops to develop healthily. A large U.S. crop is particularly needed this year because South American output shrank due to drought, analysts say.

Those concerns helped new-crop soybean futures resist further losses Wednesday.

"There's no room for error and we now have this short moisture profile heading into the heart of the growing season," Basse said.

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