U.S. grains: Soybeans hit six-week low as China virus sparks selling

CBOT March 2020 soybeans with 20- and 50-day moving averages. (Barchart)

Chicago | Reuters — U.S. soybean futures sank to their lowest level in more than six weeks on Friday as fears over the coronavirus spreading from China triggered broad-based selling.

Corn and wheat futures also weakened as the U.S. Centers for Disease Control and Prevention confirmed a second U.S. case of the new virus in Chicago. The discovery further spooked traders after the outbreak in China killed 26 people and infected more than 800.

The virus is expected to dent growth in China, the world’s top importer of soybeans, after months of economic worries over trade tensions with the United States. Equities and other commodities including oil and copper fell as investors moved into safe-haven assets.

“It’s risk-off everywhere,” said Ted Seifried, chief ag market strategist for Zaner Group in Chicago.

The most actively traded Chicago Board of Trade soybean contract dropped 0.8 per cent to $9.02 a bushel and reached its lowest price since Dec. 12 (all figures US$). CBOT wheat shed 1.5 per cent to close at $5.73-1/2 a bushel, while corn slid 1.8 per cent to $3.87-1/4.

Traders and farmers continued to wait for signs of increased Chinese buying of U.S. farm goods after Beijing pledged to significantly increase imports in an initial trade deal the countries signed last week. The agreement is meant to reduce tensions after nearly two years of a tit-for-tat tariff war.

“The stigma on soybeans of China not buying is a problem,” Seifried said.

Soybeans are the biggest U.S. crop export to China and the oilseed market has been particularly sensitive to developments in the trade dispute.

Brazil, a rival soybean supplier, is expected to harvest a massive crop, providing stiff competition for sales to China.

“There has been bearish supply news out of South America via a monster Brazilian crop, but I think the majority of the selling of late is coming from this coronavirus story,” said John Payne, senior futures and options broker for Daniels Trading in Chicago.

The U.S. Department of Agriculture reported total export sales of U.S. soybeans in the week ended Jan. 16 were 910,700 tonnes, in line with trade expectations for 700,000 to 1.3 million tonnes.

Weekly U.S. wheat sales were 741,900 tonnes, near the high end of estimates for 300,000 to 800,000 tonnes, while corn sales reached one million tonnes, within expectations for 700,000 to 1.2 million tonnes.

USDA separately said private exporters sold 142,428 tonnes of U.S. corn to unknown destinations, the second announcement in as many days.

— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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