Chicago Board of Trade soybean futures dived Tuesday, pressured by the heavier-than-expected overnight rains in dry areas of the eastern US Midwest which helped recharge topsoil moisture for young crops, traders said. The shift in the weather also triggered aggressive selling in corn, with the seven nearby months locked the 20-cent limit down by the close.
"Soybeans got caught in the same kind of mood change that hammered the corn market. It was essentially everyone running from one side of the boat to the other," said Gavin Maguire, analyst with Iowa Grain.
On Monday morning, the outlook was for the eastern US Midwest to be mostly dry this week with some light showers moving through late Monday into Tuesday. The lack of rain was stressing crops and worries circulated about a potential drought in the eastern belt this summer.
But some areas of the eastern belt like Decatur, Illinois, saw over an inch of rain overnight, easing crop jitters. "Now we've had a couple inches of rain and the forecasts are calling for a bit more and suddenly all those fears have been washed away," Maguire added. July soybeans ended down 26-1/4 cents at $8.29 per bushel. The back months were 15 to 26-3/4 cents lower.
The products followed along, with meal getting hit harder amid oil/meal spreading, traders said. July soymeal settled $8.10 per ton weaker at $229.70 per ton, with the back months down $5.40 to $7.70 per ton. The soyoil market ended 0.60 to 0.77 cent per lb lower, with July down 0.77 at 35.32 cents. Volume was heavy in soybeans estimated at 192,297 futures and 37,605 options. If the futures volume is realised, that would put the day's trade among the top 10 busiest.
Product volume was also large. Estimated soyoil volume was 82,686 futures and 2,822 options. Soymeal trade was pegged at 70,665 futures and 4,832 options. Commodity funds sold at least 7,000-8,000 soybean contracts, 2,500 soymeal and 2,000 soyoil. Commercial Bunge was a big buyer in oil of 1,100 July, traders said. Crop conditions have deteriorated in the past week due to the dryness.
The US Agriculture Department reported that 65 percent of the US soybean crop was good to excellent, down 5 points from the week before. Big drops came in the east. Indiana and Illinois were down 13 to 15 points respectively in the good-to-excellent categories.
Ratings were much lower than expected as traders estimated that conditions would drop 1 to 2 points. July soybeans are trading above all key-moving averages and its nine-day relative strength index closed in near overbought territory at 68. Spot Midwest soybean basis bids were weaker Tuesday, after the recent rise in CBOT futures triggered farmer sales, cash dealers said. Tuesday's weakness shut off movement.