Technically Speaking
Darin Newsom DTN Senior Analyst

Tuesday 01/21/14

March Beans: Bad Day at Black Rock
March soybeans were clobbered Tuesday in typical post-holiday weekend, weather market trade.[Read Full Blog Post]
Posted at 3:05PM CST 01/21/14 by Darin Newsom | Post a Comment
Comments (6)
Yesterdays sell off was in part due to maybe a cancellation of Chinas purchases. How can they just cancel a purchase?
Posted by FRANK FULWIDER at 7:31AM CST 01/22/14
Darin will explain further, but I'm sure it was a purchase that was bought at a lower price. Therefore, they cancel it, and collect the profit (of course after a "fee" is deducted). I may be mistaken, but I don't think they can or do trade outright on the CME/CBOT. But they have willing trade partners in the cash trade.
Posted by Brandon Butler at 8:19AM CST 01/22/14
You are correct Brandon, if a cancellation did occur it was on a cash purchase. However, as I talked about in Early Word Grains, this shouldn't be viewed as overly bearish. Recall that total reported sales commitments (weekly export sales) are already at 1.523bb as compared to USDA's demand projection of 1.495bb, making it almost inevitable that cancellations will be seen.
Posted by DARIN NEWSOM at 8:49AM CST 01/22/14
Am I correct in saying that this is defacto trading, i.e. speculating, by the Chinese?
Posted by Brandon Butler at 10:33AM CST 01/22/14
Maybe, in a way. Could also be viewed as CYA trading (Cover Your...) by Chinese buyers. Purchasing early and often guarantees later supplies. Then if SAm beans are as plentiful as expected, prices become more competitive, and cancellations of early purchases tend to occur.
Posted by DARIN NEWSOM at 11:01AM CST 01/22/14
That makes sense. And in the larger view, if they bought 100 million bushels a buck too high, what difference does it really make? Your CYA scenario is in essence a hedge (against running out of food, keeping civil disobedience low, et al). I'm sure their government throws around a 100 million about like ours does. A few fighter jets....big deal. Or enough for 57% of the budget of the latest "appendage" budget we heard about in the U.S.
Posted by Brandon Butler at 11:08AM CST 01/22/14
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