Grain futures fall on slumping soybean exports, China cancellations

CHICAGO: Chicago Board of Trade (CBOT) grains and soybean futures tumbled on Thursday on news that China and other buyers had canceled a flurry of US soybean orders in early January and Argentina's soy crop could be larger than previously expected, traders said.

The US Department of Agriculture's (USDA) export sales report showed net cancellations of US soybeans totaling 610,900 tonnes in the week ended Jan. 3, as the agency continues to clear a backlog caused by the US government shutdown.

Analysts were expecting net sales of 600,000 to 1 million tonnes.

The cancellations included 807,000 tonnes intended for China, the world's top soy importer, and 444,000 tonnes for "unknown" destinations, which the market believes could also be China, traders said.

As a result, some traders say they are doubting China's promised commitments to Washington to make substantial purchases of US farm products, and whether the ongoing trade negotiations between US and Chinese officials will lead to a resolution of their tariff dispute.

"The bottom line: We don't see the 5 million tonnes of US soybeans that China pledged in early December to buy," said Terry Reilly, senior agriculture analyst for Futures International. "The numbers just don't add up."

The most active soybean contract on the Chicago Board Of Trade was down 1.25 percent at $9.04-3/4 a bushel by 1544 GMT.

CHINESE IMPORTS

The market was also assessing the latest Chinese import data: it imported 7.38 million tonnes of soybeans in January, down 13 percent compared to a year earlier, but up 29 percent from December, according to Chinese customs data.

The data did not provide a breakdown of suppliers. How much of that volume came from US soybeans is not yet clear. USDA is slated to release a combined export sales report for the weeks ending Jan. 10 through Feb. 14 next week.

Also, China's growing reliance on South American soybeans could be reinforced by a strong harvest in the region. Argentina's soy crop is expected to reach 52 million tonnes during the 2018-19 season, up from 50 million tonnes previously forecast, the Rosario Grains Exchange said late on Wednesday.

"That two-pronged attack, with the US exports and the Chinese imports data, really kicked off the selling in the markets today," said Mike Zuzolo, grains analyst at Global Commodity Analytics.

CORN, WHEAT DOWN

Corn also fell, as did wheat on technical selling.

Forecasts of snowfall across the north-central and west-central Great Plains, which should insulate dormant plants from damage, weighed on wheat futures, traders said.

So did Wednesday night's heavy losses in the Russian ruble against the dollar and the euro in trading on the Moscow Exchange, on fears of new US sanctions being imposed against Russia, Zuzolo said.

As of 12:16 p.m. CST (1816 GMT), CBOT March wheat was down 14-3/4 cents at $5.07-1/2 per bushel, after hitting $5.07, the lowest since Jan. 3. CBOT March soybeans were down 12-1/2 cents at $9.04 per bushel while March corn was down 4 cents at $3.74-3/4 a bushel.