U.S. soybean futures extended losses Monday, buffeted in large part by heightened concerns over demand for the crop amid ongoing turmoil in the Chinese economy.
Meanwhile, grain prices rebounded.
Soybean prices tumbled to a six-and-a-half year low, falling as a selloff in the Chinese stock market fueled worries that buyers there would curb purchases of the oilseeds just as U.S. farmers are preparing for the autumn harvest. China is the world’s leading importer of U.S. agricultural commodities, especially soybeans, and analysts said the latest drop in Chinese equity markets prompted large investors like hedge funds and others to liquidate long positions–or bets that prices would rise-in the soybean market, pressuring prices.
Expectations that a weekly crop report due out in the afternoon would show improved condition ratings for U.S. soybeans also weighed on prices, analysts said. Widespread rainfall in the U.S. Midwest last week benefited soybean crops during a key month for plant development.
Some analysts said despite the downturn, China’s government surely would take steps to ensure its food supply. “The last thing they want is an escalation of food prices,” said Daniel Hueber, general manager of The Hueber Report, a Sycamore, Ill.-based marketing advisory service and brokerage firm. Mr. Hueber said officials in Beijing likely would continue to encourage soybean imports, though “the real questions where do they source those beans?” The pace of U.S. soybean exports is lagging well behind a year ago, with Chinese buyers purchasing a large portion of supplies from South America, though Mr. Hueber said, “it doesn’t mean demand has gone away. It’s still there, but in reduced fashion.”
Soybean futures for September delivery dropped 6 cents, or 0.7%, to $8.99 1/4 a bushel at the Chicago Board of Trade, after earlier falling more than 3% to $8.74 a bushel, the lowest intraday price since March 2009.
Corn prices turned higher after earlier succumbing gloomy economic data in China. Analysts said a lower U.S. dollar propped up prices for the grain, as the weaker domestic currency makes U.S. exports more affordable for foreign buyers.
“The dollar has been ready for a correction and this may be enough to tip it over the edge,” said Mr. Hueber, adding that “psychologically, this is what we need to see in the grain markets to shore them up and take ammunition away from the bear.”
Still, falling crude oil prices weighed on prices for the grain, as lower prices for crude typically reduce the incentive for refineries to blend fuel additives like corn-based ethanol into gasoline, potentially denting demand for the crop. Prices for crude oil dropped nearly 4% on Monday.
CBOT September corn added 3 1/4 cents, or 0.9%, to $3.68 1/2 a bushel.
Wheat prices also rose, buoyed by a lower U.S. dollar, which sank 0.9% against a basket of international currencies, according to the WSJ dollar index.
CBOT September wheat gained 4 1/2 cent, or 0.9%, to $5.04 a bushel.
