Soybeans Fall as China May Shift to Supplies From South America

Soybeans fell the most in four sessions on speculation that China, the world’s biggest importer, may shift from U.S. supplies to shipments from South America, where farmers begin harvesting in February.

Brazil and Argentina, the two biggest soybean 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 today.

“Bigger crops in South America are likely to slow demand for U.S. soybeans,” said Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana. “There are rumblings that the U.S. soybean-shipment pace may start to slow soon to China,” after cash bids weakened at export terminals near New Orleans during the past week, Gerlach said.

Soybean futures for January delivery fell 9 cents, or 0.8 percent, to $10.44 a bushel on the Chicago Board of Trade, the steepest decline since Dec. 2. Through yesterday, the price surged 14 percent since the end of September on record Chinese purchases of U.S. soybeans.

As of Nov. 26, total U.S. exports since Sept. 1 were up 58 percent from a year earlier at 27.814 million tons, including 17.02 million to China, USDA data show. China has imported 8.816 million tons, with 8.2 million remaining to be taken from U.S. suppliers before Aug. 31, USDA data show.

“Big crops in South America could lead to China switching some purchases to Brazil or Argentina,” Gerlach said.

The U.S. soybean crop last year was valued last year at $27.4 billion, second behind corn at $47.4 billion, government figures show.

By Jeff Wilson
Bloomberg.