U.S. grains: Soybeans, corn end lower as demand flags

Wheat pressured by improved Northern Hemisphere weather

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

Chicago | Reuters — U.S. soybean futures settled lower on Wednesday, as continued weak demand due to the coronavirus epidemic and renewed U.S.-China trade tensions offset support from a flurry of commodity purchases by top importer China.

Corn also slipped, following a pullback in crude oil, while wheat eased as beneficial rain for Northern Hemisphere crops kept pressuring the market.

Prices got some support from fears that damaging frost across the northern United States posed a risk to early-planted corn and soybeans, traders said. The cold northern U.S. weather also offered some support to wheat, which was still being pummeled by strong crop outlooks in Europe and the Black Sea region, traders said.

The most-active soybean contract on the Chicago Board Of Trade ended down seven cents at $8.32-1/2 a bushel (all figures US$).

CBOT corn fell 2-3/4 cents to $3.14-1/4 a bushel. Wheat ticked down 3-1/4 cents to $5.17-1/2 a bushel.

Despite recent purchases from China, the Trump administration’s increasing criticism of the country over its handling of the coronavirus pandemic had equities and commodity markets on edge, according to Ted Seifried, chief ag market strategist of the Zaner Group.

“Pompeo was taking a hard line on China again today, and you saw the markets react almost immediately,” Seifried said, referring to U.S. Secretary of State Mike Pompeo. “If they don’t start buying aggressively soon, the market feeling is this could escalate into Cold War 2.0.”

On Tuesday, the U.S. Department of Agriculture announced that Chinese buyers had booked deals for 378,000 tonnes of soybeans from the United States.

China said on Wednesday that tariffs should not be used as retaliation after President Donald Trump threatened the country over its handling of the novel coronavirus.

Optimism that corn-based ethanol plants might reopen helped futures from backsliding too much, as the U.S. Energy Information Administration reported increased ethanol production for the first time since March 4, while ethanol stocks trimmed 725,000 barrels.

“Plants are reopening again,” said Jim Gerlach, president of A/C Trading. “You’re likely to see a yo-yo. Plants will retool, they’ll outpace demand. Then stocks will build, then they’ll have to slow down again until equilibrium is found.”

Many remained skeptical about how quickly livestock-processing facilities would reopen, as worker shortages and fears of coronavirus infection keep plants below capacity.

“They’re not opening up very fast,” said Gerlach. “You can’t overcome the demand side of the ledger right now.”

— Reporting for Reuters by Christopher Walljasper; additional reporting by P.J. Huffstutter in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore.

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