U.S. grains: Soy, corn follow broad market rebound

Investors keep eye on stimulus proposals

CBOT May 2020 soybeans with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. soybean and corn futures each rose for the first time in four sessions on Tuesday as expectations of policy action to curb economic fallout from the coronavirus outbreak helped financial markets regain ground after a day-earlier drubbing.

Wheat futures also closed higher in technical moves after a choppy session, although weakness in global cash prices hung over the market, capping rallies.

Chicago Board of Trade May soybeans settled up 6-1/4 cents at $8.76-1/4 per bushel (all figures US$). May corn ended up 4-3/4 cents at $3.77-1/2 a bushel and May wheat finished up 3-1/2 cents at $5.22-1/4 a bushel.

Soybeans and corn took cues from advances in crude oil and U.S. equity markets, which bounced after Monday’s big sell-off.

“It’s (strength in) macro markets and a little bottom-picking after soybeans tanked yesterday,” said Terry Reilly, senior analyst with Futures International in Chicago.

“I think a lot of this is just investment buying. The fundamentals continue to be widely ignored,” Reilly said, noting that the U.S. Department of Agriculture in a monthly report on Tuesday raised its forecast of soybean production in Brazil and Argentina more than most analysts expected.

“We’ve got very large global (soy) stocks relative to previous years, and Brazil remains fairly cheap,” Reilly said.

Corn futures drew support from a jump in crude oil futures, which bounced from the biggest rout in nearly 30 years a day earlier. Corn is the main U.S. feedstock for ethanol fuel.

USDA, in its monthly report, left its forecast of U.S. 2019-20 corn ending stocks at 1.892 billion bushels, unchanged from February.

“People have been floating the idea that China might be picking up ethanol and DDGs eventually from the U.S., but we have not seen anything material out there yet,” Reilly said, referring to distillers’ dried grains, a byproduct of milling corn into ethanol. DDGs are used in livestock feed.

Oil prices and global equity markets recovered after the prior day’s rout as the world’s biggest economies moved to cushion the impact of the coronavirus, but stock gains in Europe failed to hold as investors remained skittish.

U.S. President Donald Trump said he would ask Congress for a payroll tax cut and other “very major” stimulus moves to ease the economic pain, but details were unclear.

“There is talk about stimulus, but we are not sure how stimulus is going to help at this point of time,” said Phin Ziebell, agribusiness economist at National Australia Bank.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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