U.S. soybean futures slide alongside Brazilian real

Soybeans on the Chicago Board of Trade fell to two-month lows Monday following President Luiz Inacio Lula da Silva's surprise election win that sent the Brazil’s currency sliding nearly 8%, the real's steepest one-day decline since 1999, on concerns over increased spending and fiscal challenges.

The election result pushed soybean futures down on the presumption that a weaker currency, if sustained, would make Brazil's soybean exports cheaper.

The real's plunge raised soybean prices by $1 per bushel in local currency, making prices in South America roughly unchanged YTD, which has the potential to "unleash a wave of farmer selling" and deliver a "one-two punch to U.S. exports" with more supplies flowing from farms to ports, making South American cargoes cheaper for global buyers, No Bull Ag analyst Susan Stroud said in a note.

Lula's victory also raised expectations of closer ties with China, potentially eroding the U.S. share of the world's biggest soybean import market.

Brazil has increasingly taken more market share in China, accounting for nearly 80% in the first nine months of the year despite China's trade deal with the U.S., its second largest supplier.

"Lula is pro-exports of beans to China, so that is bearish [for] U.S. soybeans if Brazil can fulfill more of China's needs," Futures International LLC director of commodity sales Joe Davis told Bloomberg.

Additionally, soybeans led the U.S. Department of Agriculture's weekly export inspections report, rising to 2.48M metric tons in the week ended October 22 from 2.07M tons the previous week, while corn inspections fell to 625,233 tons from 692,234 tons in the prior week and wheat inspections fell to 183,824 tons from 254,915 tons the week before.

CBOT soybeans (S_1:COM) for November delivery fell 1.2% to $12.41 1/4 per bushel after dropping as much as 1.7% to the lowest since August 26, while wheat (W_1:COM) for December delivery fell 1.4% to $6.16 per bushel and corn (C_1:COM) for December delivery edged 0.2% lower to $4.55 per bushel.