Chicago | Reuters — U.S. soybean futures on Wednesday extended a rebound from a sharp drop earlier this week as investors anticipated changes to Argentine export taxes that could reduce export competition from the major soy supplier.
Corn and wheat futures eased on pressure from a firmer dollar, which creates headwinds for U.S. exports, and concerns that the spread of coronavirus could stall grain shipments around the world and dent global economic growth.
The virus has infected about 80,000 people worldwide and killed more than 2,700, mostly in China. Cases have increased outside of China this week, including in major grain importers Japan and South Korea.
Soybean and soymeal futures bounced at midmorning on news that Argentina’s ministry of agriculture suspended the registration of agricultural exports until further notice.
“The Argentine news was supportive for soymeal and beans,” said Terry Reilly, senior commodities analyst. “It shifts the (export) flows of beans and especially meal to the United States.”
Soybeans, however, remain anchored by export competition from top supplier Brazil, whose likely record-large harvest is priced well below U.S. exports.
Chicago Board of Trade (CBOT) May soybean futures rose 3-3/4 cents to $8.92 a bushel in a second day of gains following the contract’s drop on Monday to a nine-month low (all figures US$).
May soymeal futures added $5.30 to $298.30 per ton, the contract’s steepest rise in nearly four months.
CBOT May corn was down two cents at $3.74-1/2 a bushel, while May soft red winter wheat fell 1-1/4 cents to $5.35-3/4 a bushel.
Severe disruption to economic activity in China, where the virus first developed, has already dampened hopes for increased Chinese imports of U.S. agricultural goods — as called for under the Phase One trade agreement between Washington and Beijing.
The risk of a wider impact on demand was adding to concern on grain markets, although steady short-term buying by importers was helping underpin prices.
“Demand is raising questions, with an economic impact possibly strong on global growth,” consultancy Agritel said.
“Wheat seems the most fragile since the funds are in a long net position on this product, which could lead to profit-taking, or to a market trend reversal.”
— Reporting for Reuters by Karl Plume in Chicago; additional reporting by Gus Trompiz and Forrest Crellin in Paris and Naveen Thukral in Singapore.