U.S. grains: Soybeans set back on profit taking

(Keith Weller photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures dropped 1.1 per cent on Wednesday as investors locked in profits a day after the market’s rally to a four-week high, traders said.

Wheat futures also fell, pressured by weak overseas demand for U.S. supplies. But corn closed slightly higher, with a surprise export sale triggering a mild round of short-covering after weakening during the overnight session.

Soybeans notched the biggest decline, and traders warned that the ample global supply base will likely cause a quick turnaround from any gains in the coming months.

“As long as the U.S. dollar remains strong, a solid, fundamental, sustainable rally will be elusive until a crop disaster hits,” brokerage INTL FCStone said in a note to clients.

The benchmark Chicago Board of Trade March soybean futures contract settled down 9-1/2 cents at $8.74 a bushel (all figures US$).

Another sell-off in crude oil prices added to the bearish tone hanging over the soy complex.

CBOT March wheat was down three cents at $4.71 a bushel.

“Market focus is returning today to fundamental factors: that a massive soybean harvest is expected in Brazil,” said Frank Rijkers, agrifood economist at ABN AMRO Bank. “The wheat market also faces massive supplies, and there will be strong competition to the United States in export markets from Europe, the Black Sea region and now Argentina.”

Analysts at Brazil’s Agroconsult cut their forecast for the country’s 2015-16 soybean crop to 99.2 million tonnes on Tuesday from 100.6 million tonnes in October. But a record Brazilian crop surpassing last year’s 96 million tonnes is still expected.

CBOT March corn gained one cent at $3.68-3/4 a bushel. But corn hit resistance at Tuesday’s peak of $3.69-1/2 a bushel, which was the highest for the contract since Dec. 22.

“Corn did a good job of holding on to yesterday’s rally in the face of crashing commodity prices all around us today, mainly due to chart short covering,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital, said in a client note.

The U.S. Agriculture Department said on Thursday morning that private exporters reported the sale of 243,100 tonnes of corn to Mexico for delivery during the 2015-16 marketing year, the third flash sale of the yellow grain in the past week.

Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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