U.S. grains: Corn, wheat slide on strong dollar, export uncertainty

CBOT March 2020 corn with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Chicago wheat and corn futures fell on Thursday as a strengthening dollar dampened U.S. export prospects and traders continued to wait for signs of China buying agricultural goods, analysts said.

Soybean futures eked out a modest advance.

Chicago Board of Trade March corn settled down 1-1/2 cents at $3.79-1/4 per bushel after dipping to $3.76, its lowest since Jan. 16 (all figures US$). March wheat ended down 5-3/4 cents at $5.56-1/4 a bushel while March soybeans finished one cent higher at $8.81 a bushel.

Corn fell despite robust weekly export sales. The U.S. Department of Agriculture (USDA) reported export sales of old-crop U.S. corn in the week ended Jan. 30 at more than 1.2
million tonnes, near the high end of trade expectations for 600,000 to 1.3 million tonnes.

The dollar index rose for a fourth straight day, making U.S. grains less competitive globally. Furthermore, traders questioned whether agricultural products would benefit from China’s pledge to halve additional tariffs levied against 1,717 U.S. goods last year.

“China said they were going to start taking tariffs off, but the market is tired of that news. If we could see some real purchases, we could see an upward reaction” in futures prices, said Chuck Shelby, president of Indiana-based Risk Management Commodities.

Additional market pressure stemmed from USDA’s announcement that its next monthly supply/demand report on Feb. 11 will not include details about China’s purchase commitments from the U.S.-China Phase One trade deal signed last month.

“That was disappointing to the market, when USDA stated they are not really going to use the potential China purchases (that are) coming up, we all hope, down the road,” Shelby said.

“That would lead us to believe next week we are going to see the slow export pace continue.”

While corn sales surged in USDA’s latest weekly export sales report, bolstered by bookings to Mexico and Japan, weekly soybean sales to China fell to a five-month low amid concerns about the spread of the deadly coronavirus denting demand from the world’s top soy buyer.

U.S. soybeans are also facing strong competition from Brazil, where farmers have begun harvesting a bumper crop. A USDA attache report released Wednesday projected the country’s soy harvest at 124.5 million tonnes, above USDA’s official forecast of 123 million.

Analysts surveyed by Reuters on average expect USDA in its Feb. 11 monthly report to raise its official forecast of the Brazilian soy crop.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Colin Packham in Sydney.

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