Chicago | Reuters — U.S. soybean futures set a five-week high and corn futures advanced on Monday as markets rebounded from selling last week that was fueled by concerns over the fast-spreading coronavirus outbreak.
Equity markets around the world rose on speculation that central banks will cut interest rates to soften the economic blow of the coronavirus. On Wall Street, the Dow Jones Industrial Average surged over five per cent, its strongest one-day gain since 2009.
“The snapback in the Dow today is supporting everything,” said Jim Gerlach, president of agricultural broker A/C Trading in Indiana.
The most-active soybean contract on the Chicago Board of Trade closed up 0.9 per cent at $9.01 a bushel, after earlier reaching $9.04-1/2, the highest level for soy’s most-active month since Jan. 24 (all figures US$).
CBOT corn gained two per cent to close at $3.75-1/2 a bushel. Wheat ended down 0.1 per cent at $5.23-1/4 a bushel at the CBOT, after paring losses during the session. The most-active wheat contract set a three-month low of $5.12-1/2 on Friday.
Some market participants were unwinding spread trades in which they were long wheat and short corn and soybeans, traders said.
“Corn and soy appear to have run out of selling while wheat leaks lower,” Rich Feltes, head of market insights for broker RJ O’Brien, said in a note.
China, the world’s biggest soybean importer, will need to buy U.S. soybeans to sustain a rally in soy futures, Feltes said. Traders are waiting for a big increase in Chinese purchases after Beijing agreed to buy more U.S. farm products as part of an initial trade deal signed in January. So far, the purchases have not materialized.
China’s U.N. ambassador said that while the coronavirus outbreak has had a “negative impact” on the country’s economy, Beijing was confident it would reach its economic goals for 2020.
The U.S. Department of Agriculture said 670,608 tonnes of U.S. soybeans were inspected for export in the week ended Feb. 27, within analysts’ estimates. U.S. wheat export inspections of 654,097 tonnes topped expectations, while corn inspections of 896,221 tonnes were within expectations.
In rival soybean supplier Argentina, the ministry of agriculture said last week it was suspending the registration of agricultural exports until further notice. Traders said the move likely foreshadowed a steep increase in grains export tariffs.
However, the United States is still expected to face stiff competition from Brazil for sales on the global soy market.
— Reporting for Reuters by Tom Polansek in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore.