U.S. grains: Corn, wheat drift lower on weak export demand

Chicago | Reuters — U.S. corn and wheat futures closed nearly unchanged on Tuesday, with commodity funds reluctant to add to a heavy net short position despite pressure from slowing export demand for U.S. grains, analysts said.

Soybean futures declined as traders awaited news from ongoing U.S. trade negotiations with China, the world’s top soybean importer.

After the close at the Chicago Board of Trade, a Trump administration official said U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for another round of trade talks with Chinese Vice-Premier Liu He.

CBOT May corn settled down 1/4 cent at $3.71-1/4 per bushel and May wheat ended down 1/4 cent at $4.56-1/2 a bushel (all figures US$). May soybeans fell 1-3/4 cents at $9.04 a bushel.

Trade in all three commodities was choppy, with futures trading both sides of unchanged levels.

Corn and wheat fell as traders mulled weak export demand for U.S. grains amid stiff global competition.

However, large speculators already hold sizable net short positions in grains and soy, leaving the markets vulnerable to short-covering rallies – especially as the U.S. spring planting season approaches, with the risks of planting delays.

“It’s a little early to get too excited about (planting delays), but it definitely is underneath the market. With the funds sitting on these big short positions, there is no desire to add to it, and consequently no follow-through to the downside,” said Don Roose, president of Iowa-based U.S. Commodities.

Farmers in Nebraska, the No. 3 U.S. corn state, are already struggling with historic flooding, although planting is still a few weeks away.

One exception to the weak trend in futures was MGEX spring wheat, which closed higher on firm cash markets. Poor weather in the northern U.S. Plains, particularly top grower North Dakota, has curtailed the movement of spring wheat, bolstering domestic cash bids.

MGEX May spring wheat settled up 4-1/2 cents at $5.65-1/4 per bushel after reaching $5.68, its highest since Feb. 22.

“Until the logistical mess gets figured out, there will probably be a bid under Minneapolis wheat (futures) because it’s tough to move it out of North Dakota,” said Joe Nussmeier, broker at Frontier Futures.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.