U.S. grains: Soybeans hit 10-year low on trade tensions

Wheat, corn futures bounce

cbot july soybeans
CBOT July 2019 soybeans with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. soybean futures fell to their lowest in a decade on Monday as escalating U.S.-Chinese trade tensions dampened hopes for a revival in soybean exports, analysts said.

At the same time, planting delays in the U.S. Midwest could prompt farmers to shift some acres intended for corn to soybeans, potentially adding to burdensome supplies of the oilseed. Soybeans can be planted later than corn.

Wheat and corn futures rose, bouncing from contract lows set in both grains.

Chicago Board of Trade July soybeans settled down 6-3/4 cents at $8.02-1/2 per bushel after falling to $7.91, a contract low and the lowest for a most-active soybean contract on a continuous chart since December 2008 (all figures US$).

CBOT July wheat ended up 12-1/4 cents at $4.37 a bushel, rebounding from a contract low of $4.18-1/2, and July corn rose 4-3/4 cents to settle at $3.56-1/2 a bushel, bouncing after a contract low of $3.43.

Soybeans fell after the trade tussle between the world’s top two economies intensified on Friday, when the U.S. is increased tariffs on $200 billion worth of Chinese goods, blaming Beijing for reneging on earlier commitments.

China said on Monday it would impose higher tariffs on a range of U.S. goods, striking back in its trade war with Washington shortly after President Donald Trump warned it not to retaliate. Trump said he would meet with Chinese President Xi Jinping next month.

The U.S. Department of Agriculture’s monthly supply/demand report on Friday also cooled price sentiment by projecting bigger than expected domestic supplies of soybeans, corn and wheat.

“Beans have no light at the end of the tunnel, other than the fact that funds are short,” said Matt Connelly, analyst at the Hightower Report in Chicago.

USDA last week raised its forecast of U.S. 2018-19 soybean ending stocks by 100 million bushels, to 995 million bushels, a record high. The figure could rise if Chinese buyers cancel cargoes of U.S. soybeans they have bought but have not yet shipped.

“If this thing drags out and everyone plays hardball, you are going to get more cancellations, or at least they will defer to 2019-20. And South America has got a big crop,” Connelly said.

Wheat futures bounced off contract lows after USDA reported weekly U.S. wheat export inspections of 842,418 tonnes, topping trade expectations.

Uncertainty about U.S. corn and spring wheat acreage lent support, given wet and cool weather that has slowed planting in the western Midwest and northern Plains.

“That (wheat export inspections) number was a little positive, and there is a lot of head-scratching about what the actual acres will be,” Connelly said.

After the close Monday, USDA said the U.S. corn crop was 30 per cent planted, behind the five-year average of 66 per cent and an average of trade expectations for 35 per cent.

USDA said the soybean crop was nine per cent seeded, lagging the five-year average of 29 per cent and the average trade estimate of 15 per cent.

— 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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