U.S. grains: Soy drops on South American harvest outlook

Chicago | Reuters — U.S. soybean futures fell to a six-day low on Tuesday, pressured by the rapidly advancing harvest of a record crop in Brazil and much-needed rains in Argentina.

Corn and wheat futures also weakened, setting back from 7-1/2-month highs in the absence of bullish news. Declines in corn and wheat were limited by speculators defending long positions they have built up during the recent rally.

Soybeans were on the defensive amid expectations of a bumper harvest in both Brazil and Argentina that will boost competition for U.S. supplies on the export market.

“Northern Brazil rains begin to diminish after mid-week,” Commodity Weather group said in a note. “Fairly quiet Brazil pattern (for the) rest of 10-day (outlook) to aid corn/soy fieldwork.”

The forecasting group added that rain in Argentina would maintain the potential for high corn and soybean yields in that country.

“Brazil’s soybean harvest has picked up the pace and is now about 18 percent complete compared with a five-year average of 11 per cent,” said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.

Brazil’s 2016-17 corn crop should reach a record 89.6 million tonnes as analysts raised expected yields due to favorable weather, according to a Reuters poll.

Chicago Board of Trade March soybean futures ended down 9-1/4 cents at $10.45 a bushel (all figures US$).

Dealers said that selling by U.S. soybean farmers has also helped to stall a run-up in prices this month.

U.S. farmers have made advance sales of up to half the soybeans they expect to harvest this year, looking to get ahead of the expected record South American crop.

CBOT March soft red winter wheat futures settled down 2-3/4 cents at $4.49-1/2 a bushel. Wheat rose during the five previous sessions, gaining seven per cent during the streak.

CBOT March corn was 1-1/4 cents lower at $3.74-1/4 a bushel.

Signs of good export demand kept the declines in check.

The U.S. Department of Agriculture said private exporters reported the sale of 229,000 tonnes of corn for delivery to Japan in the 2017-18 marketing year. It was the second day in a row that the government has announced a flash corn sale.

— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Nigel Hunt in London.

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