Chicago | Reuters — U.S. grain and soybean futures firmed on Tuesday, supported by a broad rebound in equity markets following losses sparked by a coronavirus outbreak in China, analysts said.
Worries about harvest delays in Brazil’s soybean areas added support.
Chicago Board of Trade March soybeans settled up 2-1/2 cents at $8.79-1/2 per bushel, a day after falling to $8.68-3/4, the contract’s lowest since May, and March corn ended up 3-1/2 cents at $3.82-1/4 a bushel (all figures US$).
CBOT March wheat finished up one cent at $5.56-1/2 after a choppy, seesaw session as traders awaited fresh direction.
Soy and corn futures took cues from Wall Street, where the Nasdaq hit a record high and the S+P 500 posted its best day in six months as fears of a heavy economic impact from the virus epidemic waned.
“With pandemic fears abating regarding the coronavirus, the trade is anticipating more aggressive Chinese buying of U.S. ag commodities beyond their current purchase program in soybeans, which could fuel further price strength in CBOT wheat, corn and soybean futures,” Dan Cekander, president of DC Analysis, wrote in a client note.
Others said the strength in CBOT grains was mostly technical in nature, given a relative scarcity of fresh fundamental news. Rains in northern Brazil, the world’s largest soybean exporter, were forecast to linger next week, although the pace of harvest has been near normal so far, the Commodity Weather Group said in a client note.
“There is really not a lot of bullish impetus, or thinking we are going to see a sharply higher market. It’s just that wet conditions in South America are delaying harvest, and that’s enough to give us a small bounce in an oversold market,” said Brian Hoops, president of Midwest Market Solutions.
Commodity brokerage INTL FCStone raised its forecast of Brazil’s 2019-20 soybean crop to 124 million tonnes, up 1.9 per cent from its January forecast.
Meanwhile, White House economic adviser Larry Kudlow said the coronavirus would delay a surge in U.S. exports to China expected from the Phase One trade deal.
“The export boom from that trade deal will take longer because of the Chinese virus,” Kudlow said.
The Phase One agreement, signed on Jan. 15 and taking effect on Feb. 15, suspended a new round of U.S. tariffs in exchange for the Chinese purchases of agricultural, energy and manufactured goods and services.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gustavo Trompiz in Paris and Naveen Thukral in Singapore.