May 6, 2020

 

Soybeans, corn futures fell as US-China tensions rise

 

 

CBOT soybean and corn futures slid on Monday as growing tensions between US and China raised further demand worries, adding to COVID-19 disruptions on biofuel and livestock feed markets, reported Reuters.

 

Favourable crop weather also weighed on prices as planting advanced in the US Midwest while rain across Europe looks set to reach Russia's crucial southern export zone this week. But CBOT wheat futures were able to shrug off that weakness in a late-session spurt of technical buying, traders said.

 

Equities and oil prices fell on Monday as a US-China spat over the coronavirus outbreak fuelled fears of a new trade war, only months after the world's two largest economies signed an agreement to defuse a tariff battle.

 

The most active soybean contract on the CBOT settled at US$8.36-1/2 a bushel, down US$0.13.

 

Corn closed the day down US$0.03 at US$3.15-1/2 per bushel, after trading near a 10-1/2 year low of US$3.09 struck two weeks ago. CBOT wheat settled up US$0.03 at US$5.19-1/2 per bushel.

 

US President Donald Trump said on Thursday the Phase 1 trade deal with China was now of secondary importance to the coronavirus outbreak and threatened new tariffs over the pandemic.

 

Agriculture was a key part of the trade pact signed in January, raising hopes that China, the world's biggest soybean importer, would ramp up purchases of US supplies.

 

"We really need to see an improved export programme in soybeans, and without China it's going to be pretty difficult to do," said Joe Vaclavik, president of Standard Grain. "We've seen China buy some beans the last couple weeks. If this thing sours, it's not a good situation."

 

The COVID-19 pandemic has already dented grain prices by shredding demand for corn-based ethanol biofuel and threatening to curb consumption of livestock feed after the closure of some meat factories.

 

Meanwhile, fair weather across the US Midwest has analysts predicting planting ahead of schedule.

 

"The vast majority are already close to being done – corn and beans. Our guys in Minnesota, parts of the Dakotas, they're wrapped up," said Mark Schultz, chief analyst at Northstar Commodity.

 

Rain relief in Europe added pressure to US wheat futures, though long-term dryness across the continent and into the Black Sea limited downward pressure. Concerns about underlying dryness in parts of the US Southern plains may also be supporting the market.