U.S. grains: Soy rises on stronger Brazilian currency

Wheat pressured by rain relief across Europe, export lull

CBOT July 2020 soybeans with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. corn and soybean futures rose on Wednesday as plans to ease lockdown measures and a move by U.S. President Donald Trump to keep meat factories open tempered fears about demand destruction caused by the coronavirus epidemic.

Wheat futures slid, hitting a one-month low as rains in Europe and the Black Sea region strengthened crop production prospects.

Chicago Board of Trade corn gained on news that ethanol stocks declined for the first time in five weeks, according to the U.S. Energy Information Administration.

Demand for corn-based ethanol has dissipated as shelter-in-place orders have kept travelers at home, driving corn markets to 10-year lows this month.

“We threw a lot of supposedly ‘bullish’ news at the corn today; petroleum rallied hard, you knocked the eastern farmer out of the fields with cold weather coming next week,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital, wrote in a client note. “The packers have been ordered to stay open, and the Brazilian currency rallied hard today.”

Bellwether CBOT July corn ended up 2-1/2 cents at $3.14-1/2 a bushel (all figures US$). Front-month May corn set a contract low at $3.00-1/4, just above psychological support at the $3 mark, before turning higher.

CBOT July soybeans settled up 5-1/2 cents at $8.37-1/2 a bushel. July wheat fell 9-1/2 cents to finish at $5.16-1/2 a bushel.

Grain traders were monitoring orders by Trump on Tuesday requiring meat-processing plants to stay open to protect U.S. food supplies.

“How effective will that be? Will they be able to get workers to work the plants, so we stop the culling of animals and reducing feed consumption?” said Arlan Suderman, chief commodities economist at INTL FCStone.

Trump’s move followed the closure of several meatpacking plants due to workers falling ill from the novel coronavirus. Reduced meat processing has reduced demand for feedgrains like corn and soybeans.

Soybean futures closed higher for the first time in four sessions. The market has struggled in recent weeks as a weaker Brazilian real dampens U.S. soy export prospects, but futures firmed on Wednesday as the South American currency strengthened.

“Mexico did buy some (U.S.) beans today. That’s good for exports. But we’re still looking for those sales to China,” said Jack Scoville, a futures market analyst at Price Futures Group.

China, the world’s biggest soy importer, has been buying competitively priced soybeans from Brazil but has also booked some U.S. cargoes in recent weeks.

The U.S. Department of Agriculture said private exporters sold 108,860 tonnes of U.S. soybeans to Mexico.

— Reporting for Reuters by Christopher Walljasper; additional reporting by Naveen Thukral.

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