U.S. grains: Profit-taking pressures soybeans

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

Chicago | Reuters — U.S. soybean futures fell on Wednesday as investors took profits after six days in a row of price increases, while wheat and corn sank on technical selling.

Traders shrugged off news of the largest soybean sale to China in more than eight months, in the absence of fresh signs of a potential phase one trade deal between the world’s two largest economies.

Chinese buyers booked deals to buy 585,000 tonnes of U.S. soybeans, the U.S. Agriculture Department said on Wednesday.

“Our business on beans has really picked up and yet we really do not have a lot to show for it on price improvement,” said Mark Schultz, chief analyst at Minnesota-based Northstar Commodity Investment Co.

Chicago Board of Trade January soybean futures ended down 7-3/4 cents at $8.93-1/2 a bushel (all figures US$).

“Buy the rumor/sell the fact,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital, said in a note to clients. “The USDA announced a slug of export sales of beans to China and the longs headed for the exits.”

An approaching Dec. 15 deadline for a new round of U.S. tariffs on Chinese goods fueled renewed caution on financial markets on Wednesday.

The U.S.-China trade dispute has already disrupted flows of soybeans and future demand for the oilseed could also be curbed by the massive outbreak of African swine fever in China.

“Soybeans are coming off a bit. Even if a trade deal is reached between Washington and Beijing, Chinese demand for beans in the near term will be impacted by the swine fever,” said Phin Ziebell, agribusiness economist at National Australia Bank.

China’s agriculture ministry said on Wednesday that African swine fever had been detected in three dead wild boars in northwestern Shaanxi province.

Expectations for a massive crop in Brazil also threatened to curtail Chinese demand for U.S. supplies of soybeans.

CBOT March corn dropped 5-3/4 cents to at $3.71-1/4 a bushel, ending near its session low and touching its lowest level since Sept. 12.

Weak demand added pressure to the corn market, Northstar’s Schultz said.

CBOT March soft red winter wheat dropped 4-1/2 cents to $5.19-1/4 a bushel. The contract sank through key technical points at its 20-day, 30-day and 40-day moving averages.

“Wheat charts made a new low on the move with all momentum down,” ED+F Man’s Sernatinger said in the research note.

— Reporting for Reuters by Mark Weinraub in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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