Chicago | Reuters — U.S. grain and soybean futures slumped on Wednesday as forecasts for drier weather in the U.S. Midwest next week fueled hopes that farmers will be able to make progress planting corn after delays.
Large inventories of the crops added pressure on the markets, which also remained nervous about trade tensions between the United States and China.
Traders focused on U.S. weather conditions after weeks of rain put corn plantings behind the average pace. The U.S. Department of Agriculture (USDA) noted in an outlook that the National Weather Service’s forecast for May 13-17 calls for below-normal rainfall in the Midwest.
Traders think the drier weather will allow farmers to plant corn quickly enough to avoid major yield losses that can occur when the crop is planted late, said Brian Hoops, president of U.S. broker Midwest Market Solutions.
“Next week, it’s not going to be warm but its going to dry out a bit,” Hoops said.
July soybean futures on the Chicago Board of Trade (CBOT) fell 0.7 per cent to $8.27-1/4 a bushel (all figures US$). The market has recovered somewhat after setting a contract low of $8.16-3/4 a bushel on Monday.
CBOT July corn lost one per cent to close at $3.64-1/4 a bushel. CBOT July wheat slid 0.4 per cent to $4.39 a bushel.
Expectations for USDA to estimate ample crop inventories added pressure on the markets, traders said.
The agency, in a report on Friday, will peg 2018-19 U.S. corn ending stocks at 2.055 billion bushels, up from 2.035 billion last month, and soy stocks at 920 million bushels, up from 895 million in April, according to a Reuters poll of analysts. Wheat ending stocks are expected to swell to 1.097 billion bushels from 1.087 billion.
“There’s not much to get excited about if you’re bullish, in that report,” Hoops said.
Traders were also monitoring news on trade talks as a deal to resolve the trade war between Washington and Beijing could trigger accelerated commodity purchases by China, helping to reduce massive stockpiles of soybeans.
U.S. President Donald Trump said on Wednesday he would be happy to keep tariffs on Chinese imports, prompting Beijing to threaten retaliation. Trade delegations from Washington and Beijing are scheduled to begin their latest round of talks on Thursday.
Soybeans were the single most valuable U.S. agricultural export crop and until the trade war China bought $12 billion-worth a year from U.S. farmers. The dispute, however, has slashed shipments of U.S. soy to China.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Nigel Hunt in London and Naveen Thukral in Singapore.