U.S. grains: Soybeans fall on oil drop

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures fell to a 1-1/2-month low on Thursday, pressured by a sharp drop in crude oil prices, traders said.

Corn futures also weakened, with investors beating down early rally attempts due to ample global supplies and signs of poor export demand.

Wheat futures were mixed, with K.C. hard red winter wheat and Chicago Board of Trade soft red winter wheat easing on technical selling. MGEX spring wheat, which hit a 3-1/2-month high, closed firm on worries that dryness in northern parts could hinder early development of crops recently seeded there.

Soybeans notched the biggest declines, with the benchmark CBOT July contract sagging 8-3/4 cents to $9.39-1/2 a bushel (all figures US$).

Oil prices fell about four per cent on Thursday, on track for their biggest daily drop in three weeks, after OPEC’s decision to extend production curbs fell short of expectations of deeper or longer cut.

Declines in CBOT and K.C. wheat futures were limited by concerns over the impact that drenched fields in key production areas could have on crop health.

“There are concerns about quality and protein in the winter wheat from all the rain,” Ami Heesch, market analyst at CHS Hedging, said in a research note to clients.

K.C. hard red winter wheat for July delivery settled down 1-1/2 cents at $4.31-1/4 a bushel and CBOT July soft red winter wheat, fell 1-3/4 cents to $4.30-3/4 a bushel.

Both contracts faced technical resistance at their 50-day moving averages.

MGEX July spring wheat futures were 1-1/4 cents higher at $5.62-1/4 a bushel.

Some bargain buying and short-covering also limited the selling in wheat.

“I think the wheat market has bottomed out at around $4.30; funds are short on wheat and any short-covering will support prices,” said Ole Houe, an analyst with brokerage IKON Commodities in Sydney. “Buyers are thinking prices are not going to get any cheaper.”

CBOT July corn futures were two cents lower at $3.69-1/4 a bushel.

The U.S. Agriculture Department reported weekly export sales of U.S. corn at 457,700 tonnes (old and new crop years combined), below a range of trade expectations.

Dealers continued to monitor sales from China’s state reserves which could limit demand on the international market.

“Higher sales from China domestic reserves are likely to impact Chinese corn imports over the coming weeks,” ING said in a market note on Thursday.

— 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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