CHICAGO: US soybean futures fell more than 2 percent on Wednesday, declining for the third day in a row as investors banked profits on long soybean/short corn spreads they put on after a government crop report last week.
Corn and wheat retreated from early gains and were in the red by the close as the dollar began recouping early losses while crude oil and equities turned south, a reflection of the ongoing global macroeconomic woes with special concern about the euro zone debt crisis.
"It was profit-taking. With beans down over 20 cents even traders in corn and wheat took profits, there was too much pressure from the bean decline," said Terry Reilly, analyst for Citigroup.
Traders said the soy market led corn lower despite firm cash markets and slow farmer selling of the newly harvested corn crop. And a lot of the market direction was linked to exiting of positions taken after a US government crop report last week.
The October US Agriculture Department report, released on Oct. 12, cut ending stocks of US soy while raising those for US corn which led to intermarket spreading or buying soybeans and selling corn.
"The market is getting out of everything that was done on an intermarket spread basis after the USDA report, and it's just chasing the speculators out of those positions," said Charlie Sernatinger, analyst for ABN Amro.
The CBOT November soybean/CBOT December corn spread gained 71-1/2 cents per bushel last week with soy outracing corn to the upside and has given back 37-1/2 cents since then.
On Oct. 12, Goldman Sachs issued a note saying soybeans would out-gain corn, which helped in last week's move.
CBOT soy for November delivery was down 25-3/4 cents per bushel at $12.25, wheat for December delivery was down 5-3/4 cents per bushel at $6.19-1/2, and December corn was down 5-1/2 at $6.38-1/2.
Corn eased for the first time in four days but the decline was slowed on slow selling of the newly harvested US corn crop. Farmers are hesitating to sell corn as they view current prices at a 20 percent discount to the record high of nearly $8 per bushel set this summer.
"The cash basis is strong and farmers aren't selling enough to keep up with the usage pace," said Dan Cekander, analyst for Newedge USA.
Wheat, corn and soybean futures continue to find a foundation or underpinning at the current lower price levels from slow farmer selling.
Analysts and traders said producers were reluctant to sell and were choosing to store the newly harvested crops in hopes for higher prices later in the year or early next year.
CBOT wheat prices are about 30 percent below the highs for 2011 set in February, corn is down about 20 percent from its record high of $7.99-3/4 set on June 10 and soybean prices are down 15 percent from the 2011 high set in August.
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