U.S. grains: Soybeans extend slide on Brazil crop outlook

Wheat follows weak trend, but Midwest crop faces frost risk

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Board of Trade soybean futures fell to a two-month low on Friday as the ongoing harvest of a projected record-large Brazilian soy crop threatened U.S. export prospects, traders said.

Corn and wheat followed the weak trend, despite a setback in the U.S. dollar.

CBOT May soybean futures settled down 4-1/2 cents at $10.06-1/2 per bushel after dipping to $10.03, the contract’s lowest since Jan. 9 (all figures US$).

CBOT May corn ended down 2-3/4 cents at $3.64-1/4 a bushel after touching $3.62-1/2, its lowest since Jan. 13. May wheat fell 3-1/2 cents to $4.40-1/2 a bushel.

The soy market was still absorbing revised South American crop estimates. The U.S. Department of Agriculture on Thursday raised its forecast of Brazil’s soybean crop to a record 108 million tonnes, from 104 million last month.

“We could still see changes to the Argentine and Paraguay crops,” MaxYield Cooperative market analyst Karl Setzer wrote in a note to clients. “Bottom line, world soybean supplies are growing this year, not shrinking, such as we have become accustomed to.”

Brazilian agricultural statistics agency Conab on Thursday raised its estimate for the country’s 2016-17 soybean crop to 107.6 million tonnes, more than 2 million tonnes above its previous forecast.

CBOT corn posted its fifth straight daily decline and finished the week down more than four per cent, the biggest weekly slide for a most-active corn contract since September, pressed by ample world supplies. USDA raised its forecast of global 2016-17 corn ending stocks to 220.68 million tonnes, above the average trade estimate and up from 217.56 million last month.

Commodity funds have held net long positions in CBOT soybean and corn futures in recent weeks, leaving both markets vulnerable to long liquidation.

“Funds who are behind the inflation/reflation/Trump-trade in commodities are fighting an uphill battle as a tidal wave of supply continues to be hurled at the market,” Halo Commodities analyst Tregg Cronin wrote in a market note.

Wheat futures drifted lower, with the May contract slipping below its 50-day moving average.

However, cold weather may threaten portions of the U.S. Midwest winter wheat crop next week.

Commodity Weather Group, meteorologist David Streit said freezing temperatures could damage crops in southern Indiana, Ohio and northern Kentucky, encompassing about 10 per cent of the U.S. soft red winter wheat area.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.

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