U.S. grains: Corn, soy, wheat plunge on coronavirus worries

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

Chicago | Reuters — U.S. grain and soy futures tumbled on Monday as fears over the rapid spread of the coronavirus outbreak beyond China dragged down broader markets and underpinned the dollar.

Technical selling further fuelled the drop, with corn and soybeans down nearly two per cent and wheat down almost three per cent. Corn futures notched life-of-contract lows in nearly all months while most 2021 soybean contracts hit new lows.

Fears mounted that the COVID-19 coronavirus outbreak in China will grow into a pandemic with disruptive and deadly consequences for countries around the world, after sharp rises in infections in South Korea, Italy and Iran and first cases found in Kuwait, Bahrain and Iraq.

The surge of infections outside mainland China triggered steep falls in Asian and European shares and Wall Street stock futures as investors fled to safe havens such as gold. Oil prices tumbled five per cent.

“The market is worrying about global trade slowing down, economic growth slowing down. And the dollar is finding strength against other currencies in a flight to safety and that makes our commodities less competitive globally,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

“We have too big of supplies and demand is on shaky ground. With the spread of coronavirus beyond China, confidence in demand sunk even more today,” he said.

Chicago Board of Trade (CBOT) May soybean futures fell 16-1/2 cents to $8.82-1/2 a bushel after earlier hitting a low of $8.79-1/4, the contract’s lowest since May 23 (all figures US$).

CBOT May corn touched a contract low and ended down 4-1/2 cents at $3.76-1/4 a bushel in a fourth straight session of declines.

CBOT May wheat fell 17-1/4 cents to a 10-week low of $5.34-3/4 a bushel after breaching technical chart support at its 100-day moving average.

The U.S. Department of Agriculture (USDA) at its annual Outlook Forum last week projected a sharp increase in U.S. corn supplies in the 2020-21 season but a tightening of soybean stocks to a four-year low.

Demand for soybeans, however, remains uncertain as China, the world’s top importer of the oilseed, struggles with the COVID-19 outbreak and lingering effects from African swine fever, a fatal swine disease that has decimated the country’s hog herd.

Soybeans also remain under pressure from a projected record-large harvest in Brazil, the world’s top soy exporter.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Naveen Thukral and Sybille de La Hamaide.

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