U.S. grains: Soybeans to one-month low on technicals, trade worries

(Photo courtesy United Soybean Board)

Chicago | Reuters — U.S. soybean futures fell to their lowest level in a month on Friday on a mix of technical selling ahead of the weekend and uncertainty about how trade disputes would affect exports, analysts said.

Wheat and corn also fell, pressured by long liquidation and bearish data in Thursday’s supply/demand reports from the U.S. Department of Agriculture.

Chicago Board of Trade July soybeans settled down 18 cents at $10.03-1/4 per bushel after dipping to $10.02, the contract’s lowest level since April 4 (all figures US$).

CBOT July corn ended down 5-1/2 cents at $3.96-1/2, dropping below psychological support at the $4 mark. CBOT July soft red winter wheat finished down 7-3/4 cents at $4.98-3/4 per bushel, falling below $5 for the first time in two weeks.

Soybeans fell as traders shed long positions ahead of the weekend. Commodity funds hold sizable net long positions in corn, soybeans and soymeal, leaving those markets vulnerable to bouts of long liquidation.

“Fridays are ‘red’ days because hedge funds don’t want to carry their positions over the weekend,” said Roy Huckabay, analyst with Linn + Associates, a Chicago brokerage.

Traders also remain nervous about trade issues with China, the world’s top soy buyer. USDA on Thursday forecast that U.S. soybean exports will break a record in the upcoming marketing year.

However, just a month ago, Beijing proposed slapping tariffs of 25 per cent on all U.S. shipments of the oilseed.

“The whole China trade thing in beans is just problematic for everything. It’s a problem for beans, and it weighs on everything else,” said Dan Cekander, president of DC Analysis.

Corn futures sagged on follow-through selling from Thursday’s lower close and reminders of hefty U.S. stockpiles. USDA on Thursday projected 2018-19 U.S. corn ending stocks at 1.682 billion bushels, above the average trade estimate of 1.628 billion.

“I think the U.S. carryout is a disappointment,” Cekander said, noting USDA projected a drop in U.S. corn exports in the 2018-19 marketing year to 2.1 billion bushels, down from 2.225 billion in 2017-18.

Wheat fell as traders digested Thursday’s larger-than-expected U.S. wheat crop estimate of 1.821 billion bushels.

“Some investors may have decided that without another crop downgrade the rally in wheat prices has come to an end. We agree with that view,” said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.

Winter wheat grown in the southern U.S. Plains has struggled with drought, but USDA said combined production of spring and durum wheat would increase 34 per cent from the previous year.

— 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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