U.S. grains: Soy, corn fall on crop prospects, trade fears

Chicago | Reuters — U.S. soybean and corn futures closed lower Thursday on improving South American crop prospects and jitters about U.S. trade relationships, analysts said.

Wheat futures rose on better-than-expected weekly U.S. export sales.

Chicago Board of Trade soybeans for March delivery settled down 5-3/4 cents at $10.49-1/2 per bushel and March corn ended down 2-1/2 cents at $3.63-3/4 a bushel. March wheat finished 2-1/2 cents higher at $4.27 a bushel.

Soybeans fell for a fifth session in the last six, after reaching a six-month high last week. The market rallied after floods swept portions of Argentina’s soy region belt earlier this month, but conditions have been dry this week.

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“Corn and soybeans are … being pressured today by improved weather outlooks in South America that are not only favouring late-developing crops, but favourable for harvest as well,” analyst Karl Setzer of MaxYield Cooperative said in a note to clients.

The Buenos Aires Grains Exchange in its first soybean forecast of the season projected Argentina’s 2016-17 crop at 53.5 million tonnes.

Soybeans also felt pressure from soyoil futures, which hit a two-month low on uncertainty about the Trump administration’s policy on biofuels, along with declines in rival Malaysian palm oil.

Soyoil is the primary U.S. feedstock for biodiesel.

Corn drifted lower in rangebound trade, but worries about prospects for U.S. corn exports to top buyer Mexico played a role. Mexico’s president scrapped a planned summit with Donald Trump in the face of insistent tweets from the U.S. president demanding Mexico pay for a border wall.

President Trump’s plan to renegotiate the North American Free Trade Agreement and his abandonment of the Trans-Pacific Partnership trade deal with Asian countries have raised concerns about U.S. agricultural trade.

“In just about every conversation I’ve had today, NAFTA has been a topic,” said Terry Linn, analyst with Linn + Associates, a Chicago brokerage.

“In times of uncertainty, people liquidate and try to get their risk down. You are seeing it in the meats as well as the grains,” Linn said.

Wheat futures bucked the lower trend. CBOT wheat rose after USDA reported weekly U.S. export sales of old-crop wheat at 853,400 tonnes, a marketing year high that easily topped trade expectations for 200,000 to 400,000 tonnes.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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