U.S. grains: Soy, wheat, corn up on economic stimulus hopes

Recovery continues off COVID-19-related pressure

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

Chicago | Reuters — U.S. grain and soybean futures rose on Tuesday on technical buying and expectations for a co-ordinated global effort to offset the economic impact of the coronavirus outbreak.

The U.S. Federal Reserve cut interest rates in an emergency move designed to shield the world’s largest economy from the COVID-19 virus, whose global spread has weighed on markets including agricultural futures.

Some traders said concerns about the economic impact appeared to be easing temporarily, opening the door for gains.

“Most of it is general support for grains and the oilseeds as we see evidence of China peaking on coronavirus amid expectations that we’re going to see a lot of central bank stimulus around the world,” said Arlan Suderman, chief commodities economist for broker INTL FCStone.

Chicago Board of Trade most-active soybeans closed up 0.4 per cent at $9.03-1/2 a bushel after earlier hitting $9.08, the highest since Jan. 24 (all figures US$).

Corn rose 1.3 per cent at $3.81-1/4 a bushel and reached its highest price since Feb. 7. CBOT wheat advanced 0.8 per cent to $5.27-1/4 a bushel.

Traders remained uncertain how COVID-19 will affect global demand for commodities, particularly buyers in China. There are now almost 91,000 cases globally, including 80,000 in China, and more than 3,000 people have died.

“We’re going to see in most of the markets a lot of whipsawing in the weeks and months ahead as we try to balance out coronavirus risks with stimulus,” Suderman said.

China, the world’s biggest soybean importer, will need to buy U.S. soybeans to sustain a rally in prices, analysts said.

Traders are waiting for an increase in Chinese purchases after Beijing agreed to buy significantly more U.S. farm products as part of an initial trade deal signed in January. So far, big new purchases of U.S. grains and soybeans by China have not been seen.

“The recovery is being limited as the full impact of coronavirus on grains and other commodities is still unclear, with impact on logistics still a concern,” said Carlos Mera Arzeno, Rabobank senior commodity analyst.

Gains in wheat futures were limited by new forecasts of a bumper harvest in Australia. Australia’s chief commodity forecaster is predicting a 40.4 per cent rise in wheat production this year, arguing that recent heavy rains are likely to encourage farmers to sow more grain.

— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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