On Thursday, the CME Group soybean market plummeted on improved crop prospects in South America.
The March corn futures contract settled 1 1/2 cents lower at $4.20. The March soybean futures contract finished 22 cents lower at $12.70. March wheat futures finished 8 cents lower at $5.97 per bushel. The March soymeal futures contract closed $10.70 per short ton lower at $406.30. The March soyoil futures settled $0.33 lower at $38.80.
In the outside markets, the NYMEX crude oil is $2.52 per barrel lower, the dollar is higher and the Dow Jones Industrials are 134 points lower.
Dustin Johnson, eHedger LLC analyst, says the markets are starting to position itself for 2014 acreage.
"For a long time, soybeans have been strong while corn has been weak due to intra-commodity spreading. We believe this is a reversal of that spread to start positioning for 2014," Johnson says.
South American production is expected to replenish world soybean supply with a record crop, this is the main fundamental reason for the shift in long term intra-commodity spreads, Johnson says.
"We also have to consider the strength in the US Dollar index as a bearish factor for soybean exports," Johnson says.
Meanwhile, as soymeal dives lower, it is putting pressure on the soybean complex, according to Pete Meyer, a New Jersey-based agribusiness consultant and publisher of farm commodity newsletter Opening Print.
"While South American weather has indeed moderated, the drop in DDG prices, as a result of Chinese rejections, has weighed on the meal market and in turn forced bean prices lower. Meal is down over $25.00 from the highs on Tuesday," Meyer says.
The corn market is being held up by the short Non-Commercial position and the Index rebalancing, Meyer says.
Meyer explains that the Indexers must buy approximately 120,000 corn futures contracts between the 5th and 9th trading day of January.
