CHICAGO/WASHINGTON, Dec 20 (Reuters) - China has scrapped purchases of 540,000 tonnes of U.S. soybeans, the U.S. Department of Agriculture said on Thursday, marking the largest such cancellation by the world's top importer of the oilseed in at least 14 years.
It was also the second cancellation this week. On Tuesday, the USDA said China had cancelled purchases of 300,000 tonnes, and traders said that another 120,000 tonnes that were scrapped by buyers the USDA did not specify were likely for China too.
Chicago Board of Trade soybean futures tumbled on the news, falling as much as 2.4 percent, 34-1/4 cents, to a low of $14.02-3/4 a bushel. At 11:30 a.m. CST (1730 GMT), futures were down 1.9 percent, or 27 cents, at $14.10 per bushel.
Prices in the U.S. grain export market also fell sharply due to the cancellations, with basis bids sinking 10 to 18 cents per bushel for soybeans shipped to terminals at the Gulf Coast.
By law, exporters must report promptly the sale of 100,000 tonnes or more of a commodity to the same destination in one day. Sales of smaller amounts are reported on a weekly basis.
Traders said the cancellations were due to a likely bumper crop in Brazil, the world's second-largest soybean exporter, where China could book supplies at much lower prices.
Brazil's government food supply agency Conab forecast the soybean crop at a record 82.6 million tonnes.
Agronomist Michael Cordonnier of Soybean and Corn Advisor consultancy said the weather in Brazil's soybean areas have generally been favorable to the crop and that he expected the harvest to kick off by early January.
"I don't see any reason not to assume a record crop in Brazil," he said by phone from Hinsdale, Illinois.
Garrett Toay, risk management consultant at Toay Commodities Futures Group in Des Moines, Iowa, said China was likely cancelling extra U.S. soybeans it had purchased as insurance in the event of a poor crop in South America.
"They could have overbooked here as protection," he said, adding that it was likely that China was shifting some of its purchases to South America.
"China is assuming there is nothing wrong with the Brazilian crop," Toay said.
After some initial concerns over the weather hurting Brazil's soybean crop, the country seems to be on the path to harvesting a bumper crop early next year.
U.S. soybean export sales in the 2012/13 marketing year (Sept/Aug) totaled more than 30.3 million tonnes as of Dec. 13 - nearly 83 percent of the USDA forecast of 36.61 million.
The majority of the sales - almost 19 million tonnes or 62 percent - were to China.
USDA data showed that 3.1 million tonnes were sold to "unknown destinations," and traders believe a sizable part of the amount was bought by China.
