Soybean markets dive on Wednesday

(DairyHerd) – The autumn slowdown in U.S. corn exports and spillover losses from  the soybean market depressed corn futures moderately Wednesday morning.   The losses accelerated soon thereafter, when a Memphis-based consulting  company released their updated forecasts for U.S. crop plantings  for the 2012-13 crop year.  They boosted their estimate of next year’s  corn plantings to 99 million acres, thereby implying a huge domestic  crop if normal weather conditions hold next year.  The resulting drop  sparked a nearby futures test of chart support just above the  psychologically important $7.00/bushel level.  Strong buying seemingly  emerged in that area, but the course of recent events makes us wonder if  the spring contracts will eventually fill the chart gap created as  prices leapt higher around Independence Day.  March corn ended the day  13 cents to $7.07/bushel, whereas the December 2013 contract fell just 5  1/2 cents to $6.17 1/2.

Having China cancel previously contracted purchases of 300,000 tonnes of  soybeans Tuesday morning obviously did a number on CBOT soybean prices  later in the day.  And after showing signs of firmness in overnight  activity, the decline resumed Wednesday morning.  The downward momentum  was apparently quite substantial, since news that a Memphis-based  consulting company had lowered its forecast of 2013 U.S. soybean acreage  by about 1.1 million acres did little to support the market.  CBOT  traders seemingly concentrated on the fact that the private forecast  would still set a record for domestic soy plantings.  January beans  essentially duplicated the preceding drop by diving 28 cents to  $14.38/bushel, while January soyoil fell 0.67 to 48.50 cents/pound and  January meal slumped an additional $8.4 to $437.2/ton.

Tuesday night talk that Egypt would enter the international wheat  markets as a major buyer was borne out by midmorning.  The fact that  they bought 180,000 tonnes of U.S. soft red winter wheat, as well as  news of a large private sale to the big African nation, sent American  wheat futures sharply higher.  However, bulls proved unable to sustain  the move.  In general, futures markets unable to build upon such  positive news are often seen as being vulnerable to a larger reversal.   That may be one reason futures continued sliding despite news that a  Memphis-based consulting company reduced its estimate of recent winter  wheat plantings by approximately 300,000 acres.  Traders may also have  been anticipating a larger downward revision.  One has to wonder if the  wheat market is now vulnerable to a resumption of the drop suffered last  week.  March CBOT wheat settled 5 1/2 cents lower at $8.05 3/4 per  bushel, while March KCBT fell 3 cents to $8.58 and March MGE futures  dropped 7 cents to $8.95 1/2 per bushel.