U.S. grains: Soy sinks on hefty supply, China trade worries

CBOT November 2018 soybeans, with 20-day moving average. (Barchart)

Chicago | Reuters — U.S. soybean futures retreated on Tuesday as the market braced for an anticipated increase in the government’s 2018 harvest forecast and amid concerns of a prolonged trade war with China, the world’s top soybean importer.

Corn futures followed soybeans lower, easing for a second straight session as traders positioned for the U.S. Agriculture Department’s (USDA) supply and demand report for October due on Thursday.

Concerns about a rain-delayed corn and soy harvest in the western Midwest limited price declines.

Wheat futures edged higher on concerns about flooding in the U.S. Plains wheat belt and signs of improving U.S. export demand.

Analysts polled ahead of Thursday’s report, on average, expect USDA to increase its U.S. corn and soybean yield and production forecasts as well as raise its U.S. and world grain and soybean stocks projections.

Chicago Board of Trade (CBOT) November soybeans fell 6-3/4 cents to $8.63 a bushel, while December corn dipped two cents to $3.64-1/2 a bushel (all figures US$).

CBOT December wheat rose one cent to $5.15 per bushel, rebounding from overnight declines after the USDA announced a large hard red spring wheat export sale to Bangladesh.

Worries about an extended trade war between the U.S. and China pressured soybeans after U.S. President Donald Trump on Tuesday reiterated threats to impose tariffs on $267 billion worth of additional Chinese imports if Beijing retaliates for recent U.S. tariff actions.

“That is weighing heavily on soybeans,” said Ted Seifried, chief agricultural market strategist for Zaner Group in Chicago.

“It doesn’t sound like there has been any progress (in trade talks) at all. It sounds like we’re at a stalemate and it sounds like, if anything, it will get worse before it gets better,” he said.

Rains in parts of the western Midwest provided underlying support to the market, however, along with a rising currency in soy export rival Brazil.

USDA’s weekly harvest progress and crop condition report on Tuesday is expected to show that corn and soybean harvesting remains ahead of normal, although the pace is expected to slow with this week’s rains.

The rains also swamped some newly seeded winter wheat fields in parts of the Plains wheat belt, which was supportive to wheat futures.

“Flooding in some areas, particularly in central and northeastern Kansas and west-central Oklahoma, will likely result in some drowned-out fields that may require replanting,” meteorologist Kyle Tapley said in a note to clients.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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