U.S. grains: Soy down as supplies outweigh China demand

CBOT March 2019 corn with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. soybean futures fell to three-week lows on Thursday as improving crop prospects in South America overshadowed renewed Chinese demand for U.S. shipments.

Corn futures also fell to the lowest in three weeks on concerns about demand from ethanol producers and as forecasts for rain in dry areas of Brazil’s corn region bolstered the country’s production outlook.

Wheat rebounded after two days of declines as short-covering and technical buying lifted prices from one-week lows.

Falling energy and equities markets weighed on grain markets in general as crude oil tumbled more than four per cent and key stock indexes fell to multi-month lows.

Chinese importers are planning to make a third round of U.S. soybean purchases within days, two sources said, after a trade war truce between Washington and Beijing this month triggered China’s largest U.S. soy purchases in six months.

But the sales totaling more than three million tonnes have fallen short of the pace suggested by forecasts for record-large U.S. and global supplies of soybeans this season.

Brazilian farmers have started harvesting some soybean fields and crop prospects have improved with beneficial rains following early-week concerns about adverse weather.

“When you’re looking at a record crop in Brazil in 2019 and a big rebound in production in Argentina, it’s starting to solidify the potential for a nearly billion-bushel carryout,” said Brian Basting, analyst with Advance Trading.

“Any time you talk about a billion bushel carryout, that’s a lot of beans,” he said.

Chicago Board of Trade January soybeans ended down 6-1/2 cents at $8.93-1/2 a bushel, the lowest since Nov. 30 (all figures US$).

CBOT March corn was down 6-1/2 cents at $3.75-1/4 a bushel. Chart-based selling as the contract broke through support levels around its 20-, 50- and 100-day moving averages accelerated the slide.

The declines came despite better-than-expected export sales of both commodities in a weekly U.S. Department of Agriculture report. USDA also confirmed, in a daily sales flash, additional sales of corn to Mexico and soybeans to China.

Worries about demand from the ethanol industry, which consumes about a third of the crop, pressured the corn market as tumbling energy prices have eroded ethanol production margins.

CBOT March wheat rose one cent to $5.23-1/2 a bushel following two days of declines that took prices down more than two per cent. The contract held chart support at its 20- and 50-day moving averages.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Nigel Hunt in London and Colin Packham in Sydney.

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