U.S. grains: Soy, corn, wheat sag as trade news awaited

CBOT May 2019 wheat with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. corn and soybean futures fell roughly one per cent on Wednesday and wheat slipped nearly three per cent on sluggish export demand for U.S. grains and a lack of news on U.S.-Chinese trade negotiations, traders said.

“The single biggest potential factor right now that could turn these market dynamics is the China trade talks, but there is currently little fresh news coming out of the talks,” INTL FCStone chief commodities economist Arlan Suderman said in a note to clients.

Chicago Board of Trade May soybeans settled down 11-3/4 cents at $9.02 per bushel, nearing psychological support at the $9 mark (all figures US$).

CBOT May corn ended down 3-1/4 cents at $3.72-1/2 a bushel. May wheat fell 12-3/4 cents at $4.50 a bushel but held above a contract low set last week at $4.47-1/4.

Washington and Beijing have been locked in intense negotiations to end the trade war between the world’s two largest economies. President Donald Trump, citing progress in talks, last week delayed a planned tariff increase to 25 per cent from 10 per cent on $200 billion of Chinese goods.

Talks are progressing well via video conference, a senior official at the U.S. Department of Agriculture said Wednesday.

“Right now, I think there’s just a lot of work in getting words down… a contract or agreement, and that’s the current status,” said Ted McKinney, USDA’s undersecretary for trade and foreign agriculture services.

Meanwhile, traders noted improving prospects for sizable global grain harvests later this year, at a time when the U.S. still has ample old-crop supplies.

“Ukraine is planting like crazy, (and) they are saying very little winter damage to the Black Sea winter crops. The EU, their winter grains look great,” said Tom Fritz, a partner with EFG Group in Chicago.

Ukraine expects a good grain harvest this year thanks to an early spring and favourable weather, the agriculture ministry said.

“We (the U.S.) are second-fiddle when it comes to the export market. And as far as this U.S.-China trade deal, the longer it takes to get done, the less chance you are going to see any old-crop business,” Fritz said.

Weekly data on U.S. supplies of corn-based ethanol added to bearish sentiment. The U.S. Energy Information Administration said ethanol production fell in the latest week to 1.02 million barrels per day while stocks of the biofuel rose to 24.26 million barrels, the highest in a year and second-most on record.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Colin Packham in Sydney.

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