U.S. grains: Corn, soy slide on South American weather, trade worries

Chicago | Reuters — U.S. corn futures hit a two-month low on Monday and soybean futures touched their lowest in seven weeks on forecasts for improving crop weather in South America and uncertainty about prospects for a U.S.-China trade deal, analysts said.

Wheat futures rose as worries about tightening global supplies sparked a round of short-covering.

Chicago Board of Trade December corn futures settled down 3-1/2 cents at $3.67-3/4 per bushel after dipping to $3.67-1/2, the contract’s lowest since Sept. 18 (all figures US$). CBOT January soybeans ended down eight cents at $9.10-1/4 a bushel after bottoming at $9.10, the lowest since Sept. 30.

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Forecasts called for beneficial rains in portions of Brazil and Argentina, the world’s No. 1 and No. 3 soybean producers.

“Widespread rainfall is expected (in Brazil) during the six- to 10-day period, which will further boost soil moisture in northern areas and also lead to improvements across central areas, favoring corn and soybean growth,” space technology company Maxar said in a daily weather note.

The trade’s attention is shifting to South American crop prospects as the U.S. harvest winds down. After the CBOT close, the U.S. Agriculture Department said in a weekly report that the U.S. corn harvest was 76 per cent complete and the soybean harvest was 91 per cent complete, behind the five-year average pace for each crop but about in line with trade expectations.

Corn and soy futures were also pressured after CNBC reported that the mood in Beijing about a trade deal was pessimistic due to President Donald Trump’s reluctance to roll back tariffs.

Earlier, Chinese state media had said Washington and Beijing held “constructive talks” on trade in a high-level phone call on Saturday that included Vice Premier Liu He, U.S. trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

“The uncertainty is leading to liquidation,” U.S. Commodities President Don Roose, referring to agricultural commodities including livestock.

The soybean market is particularly sensitive to developments in the trade negotiations as the oilseed was the most valuable U.S. agricultural export to China prior to the dispute that has seen Beijing impose retaliatory tariffs on U.S. farm goods.

Wheat futures firmed, bucking the weak trend in corn and soybeans. CBOT December wheat settled up 4-1/2 cents at $5.07-1/4 a bushel, rallying after recording a one-month low at $4.98-1/2.

Commodity funds hold a net short position in CBOT wheat futures, leaving the market vulnerable to bouts of short-covering.

“Australia’s wheat crop was short and Argentina’s crop was short. We are finding support off some of these things,” said Roose.

A weak dollar lent support, making U.S. grains more attractive to those holding other currencies.

Reporting for Reuters by Julie Ingwersen; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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