Chicago | Reuters — U.S. soybean futures fell more than two per cent on Monday and corn fell nearly one per cent as concern over the economic fallout from the coronavirus and a crash in crude oil prices pushed equities and other commodities sharply lower.
Wheat futures on the Chicago Board of Trade turned higher, bucking the trend, drawing support from short-covering and profit-taking, analysts said.
CBOT May soybeans settled down 21-1/4 cents at $8.70 per bushel after hitting $8.67, the contract’s lowest since May 13, 2019 (all figures US$).
CBOT soyoil futures fell four per cent and all contract months set life-of-contract lows in sympathy with the drop in crude oil. Soyoil is the main U.S. feedstock for biodiesel fuel.
Global equity markets plunged and crude oil prices tumbled by as much as a third after Saudi Arabia launched a price war against Russia, sending investors already spooked by the coronavirus outbreak fleeing for the safety of bonds and the Japanese yen.
Grains and soy followed, but declines were not as sharp as those on Wall Street.
“The knee-jerk reaction was to sell everything. The crude oil situation, combined with renewed or perhaps increased fears with this coronavirus situation… resulted in the perfect storm of chaos for the financial markets,” said Joe Vaclavik, president of Standard Grain, a Tennessee-based brokerage.
CBOT May corn ended down 3-1/4 cents at $3.72-3/4 per bushel while May wheat was higher, rising three cents to settle at $5.18-3/4 a bushel.
“This may be a chance for grain markets to separate themselves,” Vaclavik said, adding, “I think the corn and soybean markets are very cheap.”
However, other background factors remained bearish, with the market still awaiting large, new Chinese purchases of U.S. soybeans and grains after January’s Phase One trade deal.
The U.S. Department of Agriculture on Monday confirmed a relatively modest sale of U.S. soybeans, saying private exporters sold 123,500 tonnes of the oilseed to unknown destinations.
“The soybean market still needs news about new Chinese buying in the United States to recover,” said Matt Ammermann, commodity risk manager at INTL FCStone. “The waiting has now been very long and the question remains ‘How long can prices hold support on expected Chinese demand?'” Ammermann said.
Worries about export competition hung over the CBOT wheat market, capping rallies. The Russian ruble weakened as crude oil prices tumbled, making wheat from Russia, the world’s top exporter, more attractive globally.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.