U.S. grains: Soybeans sag as China sale fails to impress

CBOT January 2019 soybean futures with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. soybean futures fell to a one-week low on Thursday as confirmation of a 1.13 million-tonne U.S. soybean sale to China failed to impress traders who are shifting their focus to burdensome U.S. and global supplies, analysts said.

Wheat futures rose, almost hitting a two-month top, supported by signs of rising global prices, while corn futures drifted lower.

Chicago Board of Trade January soybeans settled down 13 cents at $9.07 per bushel (all figures US$).

CBOT March wheat ended up 9-1/2 cents at $5.36 a bushel after reaching $5.38-1/2, its highest since Oct. 18. March corn finished down one cent at $3.84-1/4 a bushel.

Soybeans slid to session lows after the U.S. Department of Agriculture said private exporters sold 1.13 million tonnes of U.S. soybeans to China, the first significant purchases in more than six months after a U.S.-China trade truce was reached on Dec. 1.

Traders said the sales fell short of expectations, triggering a sell-off in futures. Both the CBOT January and March contracts had rallied about $1 per bushel since September, fueled in recent weeks by anticipation that China might return to the U.S. soybean market.

“The trade may have been surprised that the number wasn’t bigger initially,” said Joe Vaclavik, president of Standard Grain, a Tennessee-based brokerage.

“It’s a start, but it’s not nearly enough to fix our problems in regards to soybeans and a soybean oversupply in this country,” Vaclavik said.

USDA has forecast that U.S. soybean stocks at the end of the 2018-19 marketing year will reach a record-high 955 million bushels, doubling from a year earlier. Global soy stocks are seen swelling to 115 million tonnes.

“It’s a very ugly supply outlook. People are finally realizing that,” said Terry Roggensack of the Hightower Report.

Wheat futures rose on expectations of tightening global supplies and improving export demand for U.S. wheat as shipments from rivals Russia and Ukraine begin to slow.

USDA reported weekly export sales of U.S. wheat at 754,000 tonnes, the biggest tally since August.

Iraq signed an agreement with the United States to import U.S. wheat and rice. And traders were still digesting Wednesday’s Egyptian wheat purchase at prices that were up $4-$6 per tonne from last week.

“The big thing is world prices moving higher. And export sales were decent this morning,” said Tom Fritz, a partner with EFG Group in Chicago.

Russia’s agriculture ministry will hold a meeting with grain exporters on Dec. 21, Interfax news agency reported, feeding speculation that the world’s biggest supplier might move to curb exports.

Worries about the size and quality of Argentina’s wheat crop lent support. The Buenos Aires Grains Exchange lowered its forecast of Argentina’s harvest to 19.0 million tonnes, from 19.2 million previously.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Nigel Hunt in London and Naveen Thukral in Singapore.

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