Chicago | Reuters — U.S. soybean futures dropped 1.1 per cent on Tuesday to their lowest in more than a week on rising expectations for a Brazil harvest already forecast to be a record, traders said.
Outlooks for a bountiful South American harvest also weighed on corn futures, while wheat eased on profit-taking after rallying on Monday.
Broker and analyst INTL FCStone on Tuesday pegged the 2016-17 Brazil soybean crop at 109.07 million tonnes, up from its previous forecast of 104.09 million. The harvest has already started in Brazil, the world’s top soy exporter.
The corn crop was pegged at 93.3 million tonnes, 1.8 million tonnes higher than its February outlook.
“For right now, we are looking at what is coming out of South America,” said Ag Watch Market Advisors president Dewey Strickler. “This is the issue that is facing us immediately.”
The U.S. Agriculture Department will issue its latest outlook for South American crops in its monthly supply and demand report on Thursday. Analysts on average were expecting the report to peg Brazil soy production at 105.95 million tonnes and corn production at 87.78 million tonnes.
Chicago Board of Trade May soybean futures settled down 12 cents at $10.25-1/4 a bushel (all figures US$). Prices hit their lowest since Feb. 27.
Soybean prices had been supported by news that heavy rain in Brazil had hampered road transport, but dry weather improved conditions on a key Amazon road between soy fields and northern ports.
CBOT May corn settled down 2-1/2 cents at $3.76 a bushel, while CBOT May wheat dropped two cents to $4.56-1/2 a bushel.
Wheat futures closed well above session lows as investors used the dip as an opportunity to cover short positions.
Brisk export demand, including a run of purchases by Egypt, has also underpinned recent gains in wheat markets. However, traders said on Tuesday that Egypt had rejected three wheat cargoes.
— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.