Soybeans Fall as Importers May Shift to Cheaper Brazil Supply
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By Jeff Wilson
Dec. 9 (Bloomberg) -- Soybeans fell the most in a week on speculation that importers will shift from U.S. supply to shipments from South America, where farmers are expected to begin harvesting a record crop in February.
Brazil and Argentina, the two biggest growers after the U.S., may produce a record 116 million metric tons next year, up 30 percent, the U.S. Department of Agriculture says. Brazil will harvest 64.6 million tons, the most ever and up from 57.2 million this year, the Agriculture Ministry said yesterday. Before this month, soybean prices rallied 14 percent since the end of September on record Chinese purchases of U.S. exports.
“The Brazilian-crop estimate was a credible psychological shot across the bow of the soybean rally,” said Greg Wagner, a senior market analyst for AgResource Co. in Chicago. “We have a huge South American supply coming on in the next two months” that will slow demand for U.S. supplies, Wagner said.
Soybean futures for January delivery declined 15.5 cents, or 1.5 percent, to $10.285 a bushel on the Chicago Board of Trade, the biggest decline since Dec. 2. Prices have slipped 3 percent this month.
“Pretty soon the U.S. will be priced out of the world soybean market,” Wagner said. “As time goes on, there will be increased market concerns that China will switch some U.S. purchases” to supplies from South America, Wagner said.
U.S. exporters sold 110,000 metric tons of soybeans to China for delivery before Aug. 31, the U.S. Department of Agriculture said today. Sales to all customers from Sept. 1 to Nov. 26 were up 58 percent to about 27.8 million tons, including 17 million to China. The USDA has forecast the domestic crop will be a record. The U.S. is the world’s largest grower and exporter of soybeans.
Soybeans, the second-biggest U.S. crop, were valued last year at $27.4 billion, government figures show. Corn was the largest at $47.4 billion.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.
Last Updated: December 9, 2009 15:33 EST
