Figuring out what China is up to in the soybean market is never easy. Today the never-transparent country's moves are murkier than ever.
Soybean futures broke to their lowest level since June overnight on news China had cancelled 22 million bushels of previous purchases. But the latest export sales report showed China buying 13.7 million bushels in the latest week. What happened between then and now?
Well, for one, prices dropped more than a buck a bushel. Anyone who purchased beans at a higher price has buyers' remorse. That's especially true in China, where crush margins suggest huge losses for any processor who didn't lock in product prices at profitable levels.
Of course, the details of how the cancellations have been unwound remain unknown. Big international grain companies threw fits when China cancelled sales a decade ago, when it first began importing beans hand over fist. Since then those grain companies have become even more established, so it doesn't look like the situation will become too messy.
And if these cancellations aren't part of a big wave, they could be just a drop in the bucket. USDA currently forecasts China will import 2.3 billion bushels of soybeans during the 2012 marketing year.
Beans tried to firm off lows on the latest news, but failed, keeping prices sharply lower on the session. Corn and wheat are also languishing, after export data that failed to provide much excitement.
Net new bookings for wheat came in at 11.6 million bushels, a little below trade guesses and well behind the rate forecast by USDA for the marketing year. Sales of hard red winter wheat were good at 4.6 billion bushels with white wheat also strong at 4.6 million. White wheat sales have flourished latest due to drought cutting production of that class in Australia.
Corn sales of 12.3 million bushels were in line with trade guesses, but there's an asterisk by the number. The total for the week included 8.2 million bushels of 2013 corn, most of which were previously announced by USDA under its daily reporting system. Old crop bookings totaled just 4.1 million.