Chicago | Reuters –– U.S. soybean futures ended mostly lower on Tuesday on crop-boosting rains in South America and as investors squared positions ahead of a key U.S. Department of Agriculture (USDA) crop report due on Friday, although short-covering trimmed losses late in the session.
Corn and wheat futures were mostly flat as late-session short covering offset early declines stemming from a firming U.S. dollar and rising U.S.-Iran tensions.
Traders squared positions ahead of Friday’s USDA report which is expected to show smaller U.S. corn and soy crops, lower U.S. winter wheat seedings and tighter end-of-season grain stocks.
Grain markets were also awaiting further details on a Phase One U.S.-China trade deal that is expected to significantly bolster Chinese purchases of U.S. agricultural goods.
Traders are monitoring corn and soybean crop weather in Brazil and Argentina as farmers in top soy exporter Brazil get set to begin harvesting a massive crop in the coming weeks.
“We’re seeing decent South American growing conditions and probably a record soybean crop in Brazil. Even if it’s been downgraded a little bit, it still looks like close to 125 million metric tonnes and that’s going to be hard to compete with for U.S. soybeans,” said Brian Hoops, president of U.S. broker Midwest Market Solutions.
Crop conditions are favourable in much of Brazil and Argentina and the key Brazilian soybean state of Rio Grande do Sul, which has been dry, is forecast to receive rain later this week, according to Kyle Tapley, meteorologist with Maxar.
Analysts polled by Reuters ahead of Friday’s USDA report expect minimal adjustments to the agency’s already-lofty prior estimates for South American corn and soy crops.
Chicago Board of Trade March soybeans ended down 3/4 cent at $9.44 a bushel and March corn shed 1/4 cent to $3.84 a bushel. CBOT March wheat settled up 1/4 cent at $5.50-1/4 a bushel after earlier notching a fresh 1-1/2 week low.
Optimism that China will accelerate purchases of U.S. farm goods has been supportive for Chicago markets, particularly soybeans, with officials expected sign a Phase One trade deal next week.
However, news from China on Tuesday worried U.S. exporters, with media reporting that Beijing will not increase annual low-tariff import quotas for corn, wheat and rice to accommodate stepped-up purchases of U.S. farm goods.
Analysts said the quotas could make it difficult to reach the trade deal’s lofty goal of roughly doubling China’s annual purchases from pre-trade war levels.
— Reporting for Reuters by Karl Plume in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.