U.S. grains: Soybeans lower on South America weather, trade jitters

CBOT March 2019 soybeans with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. soybean futures fell about one per cent on Monday on improving crop weather in South America and worries about a looming March 1 deadline for a U.S.-China trade agreement, analysts said.

Corn futures followed soybeans lower while wheat futures were mixed, with Chicago Board of Trade contracts edging higher.

CBOT March soybeans settled down 9-1/2 cents at $9.05 per bushel (all figures US$). March corn ended down 1-1/2 cents at $3.72-3/4 a bushel while March wheat finished up one cent at $5.18-1/4 a bushel.

Soybeans set the bearish tone as beneficial rains fell in crop areas of Brazil over the weekend and forecasts called for more showers this week.

“Weather in South America is looking like we have stabilized the soybean and corn crops. Enough rains are falling to curb any yield losses,” said Brian Hoops, president of Midwest Market Solutions.

Improving weather overshadowed a smaller Brazilian soy crop estimate from agribusiness consultancy AgRural. The firm pegged the harvest at 112.5 million tonnes, down from 116.9 million previously.

Meanwhile, negotiators from the U.S. and China, the world’s top soybean buyer, are trying to hammer out a trade deal before a March 1 deadline, when U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 per cent from 10 per cent.

China expressed hopes for a breakthrough as talks resumed, though a U.S. Navy mission through the disputed South China Sea cast a shadow over the prospect for improved Beijing-Washington ties.

“Both the energies and the ags came under pressure today as traders fret over the possibility that the March 1st deadline will arrive without a trade agreement with China. There is speculation that the deadline could be extended, but few want to bank on that,” INTL FCStone chief commodities economist Arlan Suderman said in a note to clients.

CBOT corn futures followed soybeans lower, with South American weather bolstering corn yield prospects.

Traders continued to digest Friday’s USDA supply/demand reports. USDA lowered estimates of U.S. 2018 corn yield and production, but raised forecasts of 2018-19 U.S. and global corn ending stocks more than most analysts expected. USDA also raised its estimate of Argentina’s corn harvest to 46 million tonnes, from 42.5 million previously.

“It’s going to be tough to export what we have, when you have Ukraine and Argentine crops larger than a year ago,” Hoops said.

CBOT wheat closed higher, rallying from early declines on technical buying and fund-driven short-covering, traders said.

Signs of improving export demand for U.S. supplies lent support. USDA said private exporters sold 128,000 tonnes of U.S. hard red winter wheat to Nigeria and another 120,000 tonnes of U.S. soft red winter wheat to Egypt.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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