U.S. grains: Soy, wheat decline on persistent demand worries

Chicago | Reuters — U.S. soy and wheat futures fell on Monday on positioning ahead of a monthly U.S. Department of Agriculture crop supply/demand report and uncertainty about the ongoing U.S.-China trade dispute, traders said.

A higher dollar added pressure, making U.S. grains less competitive on global markets. Corn followed the weak trend but found underlying support from private exporters selling more than 1.6 million tonnes of U.S. corn to Mexico.

Chicago Board of Trade (CBOT) January soybeans settled down seven cents at $9.09-3/4 per bushel (all figures US$). CBOT March wheat ended off six cents at $5.25-1/4 a bushel, and March corn fell 1-1/2 cents at $3.84.

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“The ags have largely been stagnant thus far today, facing modest headwinds from the outside markets, with traders also being cautious ahead of (Tuesday’s) USDA crop report,” INTL FCStone chief commodities economist Arlan Suderman wrote in a client note.

Analysts, on average, expected only modest changes on Tuesday in the USDA’s monthly forecasts of U.S. soy, corn and wheat ending stocks for the 2018-19 marketing year.

USDA last month trimmed its forecast of U.S. 2018-19 soybean exports to 1.9 billion bushels from 2.06 billion. Some think the final U.S. soy export figure will be even lower, given the virtual halt in purchases by top buyer China.

“USDA is overdoing it, I think, as far as corn and soybean exports this year,” said Brian Hoops of Midwest Market Solutions. “That (1.9 billion) may be a number that we are not able to reach this marketing year.”

The U.S.-China trade row continued to hang over the market.

U.S.-China trade negotiations need to reach a successful end by March 1 or else new tariffs will be imposed, U.S. Trade Representative Robert Lighthizer said on Sunday, stressing the “hard deadline” after a week of seeming confusion from Washington.

Highlighting the impact of the standoff, China imported 5.38 million tonnes of soybeans in November, the lowest monthly amount in two years, customs data showed on Saturday.

China, the world’s largest soybean importer, this year put extra tariffs on U.S. soybeans, causing shipments of U.S. supplies to dry up.

“Soybeans remain under the influence of diplomatic relations between the U.S. and China,” consultancy Agritel said in a note.

CBOT corn found underlying support after USDA confirmed that private exporters sold 1,645,920 tonnes of U.S. corn to Mexico, including 1,104,900 tonnes for delivery in the 2018-19 marketing year that began Sept. 1.

However, the market was unable to stay in positive territory.

Wheat futures declined on technical selling and profit-taking after the CBOT March contract on Friday hit a 5-1/2-week high on larger-than-expected weekly U.S. export sales.

Traders have been waiting for signs that dwindling supplies in the Black Sea region, which includes top wheat exporter Russia, will spur more demand for U.S. wheat.

— 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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