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Column: Soybeans take unusual dive on trade jitters ahead of USDA data -Braun

FORT COLLINS, Colo. (Reuters) - Price action in Chicago corn and soybean futures is often muted in the final lead-up to big government reports, but Tuesday marked soybeans’ steepest drop on USDA’s “planting intentions eve” since 2008.

FILE PHOTO: Soybeans stocks are seen in Rio Verde, Goias state, Brazil January 31, 2019. REUTERS/Jose Roberto Gomes

That indicates a large amount of uncertainty ahead of Wednesday’s reports from the U.S. Department of Agriculture, and speculators are especially vulnerable as they have held on to historically bullish grain and oilseed bets since late last year. The end-of-March USDA data is known to be a big market mover.

Most-active soybeans fell 1.9% on Tuesday and the contract finished at $13.66-3/4 per bushel, its lowest settle since Feb. 10. Soybeans also faced pressure from soybean oil futures, which through Tuesday notched a four-session losing streak of 12.2%, their worst such period since October 2008.

Nearby corn futures fell 1.4% on Tuesday, an identical result as the same date a year earlier. That move is relatively less significant than the one for soybeans, but most-active corn settled at $5.39-1/4 per bushel, its lowest in more than two weeks.

Corn and soybean futures are at respective eight- and seven-year highs for the date, and speculators have amassed a lot of risk. Money managers a week ago established their most bullish position in CBOT corn futures and options since February 2011, but trade estimates suggest they dumped nearly 49,000 futures contracts over the last five sessions.

Funds are also seen as sellers of 47,000 soybean futures during that time, though money managers’ net long position in soy futures and options is substantially off the near-record levels observed late last year.

If Wednesday’s numbers, which will feature U.S. planting intentions and quarterly grain stocks, are bullish relative to expectations, there are some potential headwinds that could be faced in the weeks ahead, especially in the new-crop contracts.

Balance-sheet projections suggest there is no room for soybean acres to come in light, as supplies will approach all-time lows in the next several months. But if China’s soybean demand is dampened by African swine fever, which is a growing concern of the market, a smaller soybean acreage will be less problematic.

Warmer temperatures expected for the U.S. Corn Belt in the next couple of weeks would be favorable for the start of corn planting. An early, efficient start can support an expansion of acres over initial intentions and it is also a step in the right direction for securing big yields.

PRICE TRENDS

Last year’s end-of-March report day featured by far the most mundane price action for the date in more than 15 years. Most-active corn futures ended 0.1% lower on the day while soybeans had a 0.4% bump, but in the 14 prior years, at least one of those contracts moved by 2% or more. (tmsnrt.rs/2QRqIPA)

Last year stands out in that the onset of the pandemic meant that March had already been a particularly tough month for the markets, driving corn and soy futures to respective 14- and 13-year lows for the time of year.

Only five of the last 15 March stocks and intentions reports generated bullish moves for both corn and soybeans, the latest being 2018. Truly opposite price trends resulted only three times, most recently in 2017, and they were all instances of higher corn, lower beans.

Sharp corn losses were observed on report day in 2015 and 2016, but soybeans drifted only fractionally higher, so they are not being considered to have had a decisively positive move in this example.

Analysts have hit both corn and soybean planting intentions only twice in the last 15 years, 2010 and 2011, as their guesses were within half a percent of the published number. The last time the trade’s pegs of March 1 corn and soybean stocks were both within 1% of the actual was in 2006. (tmsnrt.rs/3rDs3WX)

There is no instance in recent history where the trade had a consistent bias across all four major numbers at the end of March (corn and soy acres, corn and soy stocks), increasing the odds that the market is faced with some sort of curveball on Wednesday.

Editing by Matthew Lewis

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