U.S. grains: Soybeans sink as China trade optimism wavers

march corn
CBOT March 2019 corn futures with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. soybean futures dropped nearly two per cent on Thursday, the steepest slide since Nov. 26, reversing a week of gains due to a lack new purchases by China following trade talks with the United States.

Forecasts for a bumper Brazilian soybean crop added pressure despite recent hot, dry weather in parts of the top exporting country that has tempered forecasts for a record harvest.

Corn and wheat futures followed soybeans lower as optimism that China would be soon buying a substantial amount of U.S. goods, including both grains, sputtered.

“Technical selling is weighing on the market and we’ve been building a pretty large premium anticipating that these meetings in China would give us some sort of resolution and more buying of products. That does not seem to be the case at the moment,” said Brian Hoops, president of U.S.-based brokerage Midwest Market Solutions.

China’s commerce ministry said on Thursday this week’s trade talks were extensive and detailed, while the U.S. Trade Representative’s office said that China had pledged to purchase “a substantial amount” of U.S. agricultural, energy and manufactured goods and services.

However, grain markets were still seeking evidence of more Chinese demand, after several purchases of U.S. soybeans in the past month as part of a 90-day truce agreed by U.S. President Donald Trump and Chinese counterpart Xi Jinping in their countries’ tariff dispute.

In Brazil, statistics agency Conab cut its estimate of the 2018-19 soybean harvest that is underway to 118.8 million tonnes from 120.1 million in December, near the high end of trade expectations.

Others, including consultancies AgRural and Agroconsult have also lowered their crop forecasts.

Poor South American weather, including excessive rains in Argentina, have also trimmed some corn production forecasts, although Conab’s outlook improved.

Chicago Board of Trade (CBOT) March soybeans fell 17-1/4 cents to $9.06-3/4 per bushel (all figures US$).

March corn fell 5-3/4 cents to $3.76-1/4 a bushel, breaching chart support at its 20-, 50- and 100-day moving averages.

CBOT March wheat dropped 6-1/4 cents to $5.13-3/4 a bushel, the first decline in six sessions. Selling accelerated as the contract broke through chart support at 20- and 50-day moving averages.

U.S. wheat export sentiment has cooled following a clean sweep for Russian wheat in an import tender held by Egypt on Wednesday. The 415,000-tonne deal countered recent expectations that Russian wheat was becoming uncompetitive overseas after a brisk first half of its export season.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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