Chicago | Reuters — U.S. corn futures fell about 1.5 per cent on Tuesday, with the front contract at times dropping below US$4 a bushel as U.S. trade tensions with China re-emerged, analysts said.
Wheat turned lower after climbing to multi-month highs, and soybeans also slipped.
Chicago Board of Trade July corn settled down six cents at $4 per bushel after dipping to $3.97-1/2, its lowest since May 18 (all figures US$). July wheat ended down 6-1/2 cents at $5.36-1/2 a bushel and July soybeans fell 11 cents at $10.30-1/2 a bushel.
Corn tumbled after the U.S. said it will continue pursuing action on trade with China, days after Washington and Beijing announced a tentative solution to their dispute and suggested that tensions had cooled.
China is the world’s biggest soybean importer and the top buyer of U.S. sorghum, a feed grain that competes with corn.
The news appeared to trigger long liquidation in corn and soybeans, markets in which commodity funds hold net long positions.
A stronger dollar added to the negative tone, making U.S. grains less competitive on the world market.
“The dollar strength is a real anchor for all the trade. Then you get kicked with the China trade headlines,” said Don Roose, president of Iowa-based U.S. Commodities.
Also, traders believe the U.S. corn crop is off to a good start, overcoming early planting delays in April. After the CBOT close, the U.S. Department of Agriculture rated 79 per cent of the U.S. corn crop as good to excellent, topping a range of analyst expectations and the year-ago rating of 65 per cent.
Wheat futures followed corn and soy lower, retreating after the CBOT July contract hit a 10-month high on concerns about dry weather in Russia and elsewhere.
Forecasts for beneficial rains in the northern U.S. Plains spring wheat belt and possibly Canada added pressure.
Soybeans declined but drew underlying support from transport problems in Brazil, where a truckers’ strike has been slow to unwind, even after the government agreed to subsidize diesel prices in a bid to end protests.
Soybean exporters are considering declaring force majeure on shipments, a contractual clause that releases them from obligations because of events beyond their control, according to Anec, a trade group representing grains exporters such as Archer Daniels Midland and Louis Dreyfus.
“If it were not for the Brazilian strike woes going on, beans could be much lower than they are,” Futures International analyst Terry Reilly said.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Colin Packham in Sydney.