U.S. grains: Soy hits six-week low on South American prospects

(Keith Weller photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures fell to a six-week low on Tuesday on improving South American crop prospects and uncertainty about export demand from China, analysts said.

Corn rose on technical buying and expectations that commodity index funds will buy grain next week as they rebalance portfolios. Wheat closed lower, retreating from early advances.

The benchmark Chicago Board of Trade March soybean futures contract settled down nine cents at $9.95 per bushel after dipping to $9.94-1/2, its lowest since Nov. 18 (all figures US$).

CBOT March corn ended up 3-3/4 cents at $3.55-3/4 per bushel and March wheat fell 1-1/2 cents at $4.06-1/2 a bushel.

Soybeans declined for a fourth straight session as analysts grew more confident of crop prospects in South America and particularly Brazil, projected as the world’s No. 2 soybean producer after the United States.

“The market is feeling more secure about South American bean production, and therefore they don’t need to buy U.S. (soybean) acres as much for 2017,” said Mike Zuzolo, analyst with Global Commodity Analytics.

Others cited U.S. President-elect Donald Trump naming Robert Lighthizer, a critic of China’s trade practices, to serve as U.S. trade representative as a bearish market factor for soybeans.

“That was new this morning and I think the bean market likely took note of it,” said Rich Feltes, vice-president for research with R.J. O’Brien. China is the world’s top buyer of soybeans.

“We know China can’t live exclusively without U.S. soybeans, but they can probably shift enough demand down to South America to make a difference,” Feltes added.

CBOT corn firmed on technical buying and expectations that commodity index funds will buy corn as they make annual adjustments to their portfolios for 2017.

The managers of both the S+P GSCI and the Bloomberg Commodity Index last autumn announced plans to raise the share of corn and wheat in their indexes for 2017, and the funds typically make those adjustments in January.

Wheat turned lower in technical moves, retreating from early advances. But worries about dry conditions in Kansas and Oklahoma, the top U.S. winter wheat states, underpinned values.

“I do think there are some issues with the crop out there. It’s not nearly as good as it was when the last crop conditions report was done,” Zuzolo said, referring to the U.S. Department of Agriculture’s final weekly crop progress report for 2016, issued in late November.

USDA was scheduled to release monthly crop reports for a few Plains states later on Tuesday.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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