Chicago | Reuters — Chicago Board of Trade soybean futures sank on Tuesday on expectations that U.S. exports will dry up due to increasing competition from South American countries, traders said.
Corn futures also weakened, with ample global supplies and technical pressure triggering a round of profit-taking after they rose on Monday.
Wheat edged higher on technical buying, but the gains were limited as bearish fundamentals continue to anchor prices, traders said.
The soybean drop stemmed from Argentine President Mauricio Macri’s decision to cut the export tax on soybeans, the country’s main cash crop, as part of his plan to revitalize the massive farm sector after years of antagonism with the government.
Investors also were watching to see if Macri eases currency controls that could weaken the Argentine peso and potentially give a further spur to the country’s exports.
“The market is still focused on changes in the Argentine export landscape and coming currency devaluations that may come into play,” Richard Plackemeier, market analyst at CHS Hedging, said in a note to clients.
CBOT January soybean futures settled down seven cents at $8.67-1/4 a bushel (all figures US$). The front-month contract bottomed out at $8.66-1/2, its lowest level since Nov. 25.
Sharp declines in soymeal and soyoil added to the pressure on soybeans. Soymeal futures hit fresh contract lows, with traders citing a supply glut amid poor demand from both domestic and overseas buyers.
CBOT March corn ended 1-3/4 cents lower at $3.77-1/4 a bushel and CBOT March wheat gained 3/4 cents to close at $4.94-1/4 a bushel.
March wheat closed below its session high after failing to take out last week’s high of $4.98 a bushel. Support was noted at the 20-day moving average.
CBOT corn retreated from overnight gains after failing to take out Monday’s highs.
“The charts look like they are failing up here and getting ready to turn momentum down,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital, said in a note to clients.
Investors in commodity markets also were waiting for this week’s Federal Reserve meeting, which could bring the first U.S. interest rate rise in nearly a decade.
— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.