Chinese businesses (really speculators) having "liquidity problems", polite term for "going bust". Truck Wreck going terminal? What happens then, people there starve? Renigning on large contracts, is not a good way to guarantee supplies?
Reuters
CBOT soy ends weak to limit-down on China talk
Thursday May 27, 5:16 pm ET
CHICAGO, May 27 (Reuters) - Chicago Board of Trade soy futures ended sharply lower on Thursday with July beans (SN4) and meal (SMN4) down their daily limits and at three-month lows on worries about faltering Chinese soy demand, brokers said.
Talk that top global soy buyer China was renegotiating purchases of up to 26 Brazilian soybean cargoes particularly hit CBOT soy futures, they said.
The talk follows China's recent suspension of Brazilian soybean imports by major suppliers and news that 16 of China's oilseed processors had agreed to share current soybean supplies and reduce exports for the second half of the year due to financial difficulties.
"Everyone is throwing in the towel at once," one cash-connected CBOT source said. "I can't imagine that the exporters have let the problems go unhedged until now. But the guys who were still hanging on by their fingernails are getting out now."
Many Chinese crushers have had liquidity problems following Beijing's move to a tighter monetary policy and after bird flu dampened Chinese soymeal demand. The Chinese importers bought many of the soy cargoes when CBOT soybean futures prices and global freight rates were at multi-year highs.
Fears of slowing Chinese soy demand are particularly bothersome because CBOT traders have attributed this year's 16-year high prices partially to unprecedented Chinese buying of U.S. soybeans.
CBOT soybeans ended down 7-1/2 cents to 50 cents per bushel, with July down 50 cents at $8.22 and November (SX4) down 36 cents at $6.73. There were at least 500 unfilled sell orders left in July, while CBOT soybean options suggested a Friday open of $8.20 per bushel.
Commodity funds sold at least 7,000 lots and commercials bought July, brokers said. Citigroup sold 700 July, R.J. O'Brien and Man Financial each sold 500 July.
CBOT soymeal settled down $6.00 to $20.00 per ton, with July down $20.00 at $257.30 and December (SMZ4) down $13.40 at $213.80 per ton. Cargill Investor Services sold about 5,000 to 6,000 deferred contracts, while fund sales totaled at least 9,000 lots, traders said. Cash U.S. soymeal basis offers were steady to weak, dealers said.
Soyoil futures closed down 0.47 cent to 1.28 cents per lb, with July (BON4) down 1.28 cents at 27.58 cents. A weak close in rival Malaysian palm oil futures also weighed on CBOT soyoil, brokers said.
Rumors of U.S. soymeal imports and disappointing weekly U.S. soybean export sales also weighed on CBOT soy on Thursday, CBOT brokers said.
The U.S. Department of Agriculture reported weekly soybean export sales through last Thursday at a minus 9,200 tonnes (old-crop and new-crop combined), below CBOT traders' estimates. Weekly U.S. soymeal export sales totaled 89,000 tonnes, above traders' estimates, and weekly U.S. soyoil sales totaled 28,600 tonnes, matching traders' estimates.
Thursday's U.S. Census Bureau monthly soybean crush data were neutral, brokers said. Census said U.S. soybean crush in April totaled 112.5 million bushels, slightly above analysts' estimates for 112.3 million. U.S. April soymeal stocks totaled 338,615 tons, above analysts' estimates, and U.S. April soyoil stocks were 1.641 billion pounds, below trade estimates.
The CBOT July soybean crush margin closed down 8.08 cents at 47.44 cents per bushel. Estimated CBOT soybean volume on Thursday was 69,809 futures, compared with Wednesday's trade of 68,689 lots. Estimated soybean options volumes was 36,693 lots. In soymeal, an estimated 40,486 futures and 6,161 options traded. Thursday's estimated soyoil volume was pegged at 27,221 futures and 3,105 options. |
