U.S. grains: Markets rise on corn export demand, crop worries

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. grain futures rose on Thursday on strong demand for corn and worries that harvests may be smaller than expected due to unfavourable global weather.

Soybean futures shook off early losses to end higher despite concerns about the ongoing trade battle with China, the world’s top buyer of the oilseed. Last year, soybeans were the biggest U.S. agricultural export to China, worth more than $12 billion (all figures US$). However, Chinese buyers have been loading up on soybeans from Brazil instead of the U.S. because of the dispute.

China’s foreign ministry said it is clear who is right and who is wrong in the spat, after U.S. President Donald Trump’s top economic adviser, Larry Kudlow, said Chinese President Xi Jinping was “holding up” a deal to resolve the dispute.

“The big cloud of the trade war hanging over the market has made anyone really reluctant to step in,” said Arlan Suderman, chief commodities economist for brokerage INTL FCStone.

The most-active soybean futures on the Chicago Board of Trade rose 3-3/4 cents to $8.61-1/2 a bushel. The contract on Wednesday touched its highest price since July 11, partly on hopes the U.S. and China could resolve the trade conflict in the coming months.

“Without any resolution to the trade tensions and with weather that is not all that threatening, it is going to be hard to convince anyone to aggressively buy beans,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage.

The U.S. Agriculture Department said soybean export sales totalled 865,700 tonnes in the latest reporting week, in line with analysts’ expectations. Weekly U.S. wheat export sales of 300,000 tonnes were also in line with expectations, while U.S. corn export sales of 1.416 million tonnes topped analysts’ estimates.

“Demand for U.S. corn is strong both domestically and globally and looking to stay strong for some time,” Suderman said.

Recent hot, dry weather in the U.S. raised concerns that corn and soy yields may be lower than analysts and traders had been projecting.

Dryness also hurt crops in Argentina, a major corn and soy exporter that competes with the U.S. The Buenos Aires Grains Exchange cut its estimate for the 2017-18 corn crop to 31 million tonnes, from 32 million.

Unfavourable dryness in Europe and the Black Sea region helped lift wheat prices as well, traders said.

Most-active CBOT corn futures were up four cents at $3.65 a bushel, and CBOT wheat was up 9-3/4 cents at $5.04-1/4 a bushel.

— Tom Polansek reports on agriculture and commodities for Reuters from Chicago; additional reporting by Nigel Hunt in London and Naveen Thukral in Singapore.

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