(Nasdaq) – U.S. soybean prices slid to the lowest in more than 6 1/2 years on Monday as concerns grew over demand for domestic supplies of the oilseeds. Meanwhile, corn and wheat gained.
Soybeans prices sank, buffeted by worries that the results of a presidential election in Argentina on Sunday would spur farmers there to begin selling vast quantities of the oilseeds onto the global market after holding onto crops for much of the past year. Argentina is a key U.S. rival for world soybean business and analysts said President-Elect Mauricio Macri had earlier promised to reduce export taxes on the oilseeds, prompting growers who are sitting on big inventories to ramp up selling, which could dampen demand for U.S. supplies.
Argentina’s new government could reduce the export tax on soybeans by about 5% a year, even as farmers there have about 11 million metric tons of the oilseeds on hand, according to analysts. Though the full inventory likely wouldn’t hit the world market all at once, the threat of additional competition for foreign purchases comes at a time when demand from China, the world’s largest soybean buyer, is slowing, analysts said.
“Longer-term this has the potential to shake up global trade,” said Arlan Suderman, chief commodities economist for brokerage INTL FCStone. He notes that “Argentina has vast agricultural resources and if [Mr. Macri] succeeds in advancing these reforms it will help Argentina leverage them at a time when the U.S. dollar is strong and making us less competitive.”
Soybeans futures for January dropped 6 1/4 cents, or 0.7%, to $8.51 1/4 a bushel at the Chicago Board of Trade, after earlier hitting $8.44 1/4 a bushel, the lowest intraday price since early March 2009.
Wheat prices gained, rising thanks to technical buying and an uptick in domestic demand for the crop. Analysts said U.S. buyers likely are purchasing wheat, which has become attractive since prices for the grain dropped sharply earlier in the month.
CBOT December wheat advanced five cents, or 1%, to $4.93 1/2 a bushel.
Corn prices notched higher, pulled upward by strength in the wheat market. Still, corn’s gains were limited by speculation that Argentina’s new government also could eliminate export taxes on the grain, encouraging farmers there to plant more corn acres in coming years and adding to already-stiff competition for U.S. exports.
“Long-term we should see a big increase in available corn and wheat supplies” from Argentina, Mr. Suderman said. “I think Argentina in a couple of years could become the No. 2 corn exporter behind the U.S.”
CBOT December corn added 1 cent, or 0.3%, to $3.64 1/4 a bushel.
