U.S. grains: Corn hits two-week low on virus worries

CBOT March 2020 corn with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. corn futures fell to a two-week low on Monday as traders worried that the fallout from the coronavirus epidemic could include an economic hit to China, traders said.

But soybean and wheat futures ended modestly higher, rebounding from multimonth lows on light bargain buying, strength in soyoil and supportive soybean export data.

Chicago Board of Trade March corn settled down 2-1/2 cents at $3.78-3/4 per bushel after dipping to $3.76-1/2, the contract’s lowest since Jan. 16 (all figures US$).

March soybeans rose 4-1/2 cents to $8.77 a bushel, rallying after a drop to $8.68-3/4, the contract’s lowest since May 24. CBOT March wheat ended up 1-3/4 cents at $5.55-1/2 a bushel, bouncing after dipping to $5.46-1/2, its lowest since Jan. 8.

Uncertainty about global demand for commodities due to the coronavirus outbreak hung over the market. The death toll in China from the virus reached 361 as of Sunday, and Chinese commodity markets tumbled as trading resumed after an extended Lunar New Year break.

“The virus is the big thing, but it depends who you talk to how serious or lasting this is,” said Terry Linn, an analyst with Chicago brokerage Linn + Associates.

Generally favourable crop weather in South America added to bearish sentiment, bolstering expectations for large corn and soy harvests in Brazil and Argentina.

And a stronger dollar threatened to make U.S. grains less competitive on the world market.

But CBOT futures pared losses as traders considered whether markets, especially soybeans, were oversold. On Friday, the CBOT March soybean contract fell for a ninth consecutive session.

On Monday, soybeans turned up as the U.S. Department of Agriculture confirmed private sales of 130,000 tonnes of U.S. soybeans to Egypt.

Also, USDA reported export inspections of U.S. soybeans in the latest week at 1,355,627 tonnes, topping a range of trade expectations for 550,000 to 1,200,000 tonnes.

“You had an export sale to Egypt. Maybe that and the export inspections were enough to give you a reversal trade,” Linn said of the bounce in soybeans.

USDA’s weekly export inspections figure for corn, at 562,380 tonnes, was at the low end of trade expectations, while the wheat inspections figure of 413,984 tonnes was in line with expectations.

CBOT soyoil futures rose on worries about tightening world supplies of vegetable oil.

“We are still looking at one of the lowest stocks-to-use ratios since the 1970s for global vegetable oils, and that has not disappeared,” said Jim Gerlach, president of Indiana-based A/C Trading.

— 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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