Soybean futures drop to 13-month low as risk aversion mounts

Investing.com – Soybean futures were down sharply on Wednesday, trading at the lowest level in more than a year as mounting fears over the global economic outlook prompted investors to shun riskier assets.

On the Chicago Mercantile Exchange, soybean futures for January delivery traded at USD11.3562 a bushel during European morning trade, tumbling 1.51%.

It earlier fell by as much as 1.85% to trade at USD11.3438 a bushel, the lowest price since October 8, 2010. 

Agricultural commodities continued to be affected by outside influences after Germany’s Treasury auctioned just EUR3.64 billion of 10-year government bonds out of the maximum EUR6 billion offered in an auction earlier.  

Total bids for German debt fell short of the maximum amount available by 35%, the worst demand on record.

Meanwhile, concerns that the euro zone was sliding into a recession mounted after preliminary data released earlier showed that manufacturing activity in the single currency bloc fell to the lowest level since July 2009 in November.

Separate data showed that manufacturing output in Germany also dropped to a 28-month low.

Also Wednesday, official data showed that industrial orders in the euro zone fell significantly more-than-expected in September, tumbling 6.4% outstripping expectations for a 2.7% decline.

The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to traditional safe haven assets like the U.S. dollar.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.7% to trade at 78.94. A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.

Soybean prices came under pressure during the Asian trading session after a preliminary reading of the HSBC China purchasing managers' index fell to a contractionary reading of 48.0 in November, down from 51.0 in October.

It was the lowest level since March 2009, renewing fears over an economic ‘hard landing’.

China is the world’s largest soybean consumer and is expected to account for nearly 60% of global trade of the grain in the 2011-12 season, according to the USDA.

Elsewhere on the Chicago Mercantile Exchange, corn for December delivery dropped 1.45% to trade at USD5.9000 a bushel, while wheat for December delivery fell 1.6% to trade at USD5.8375 a bushel.