|16 January, 2020

Soybeans near 1-month low on doubts over China demand; wheat eases

The most-active soybean contract on the Chicago Board Of Trade was down 0.2% to $9.26-1/2 a bushel

Image used for illustrative purpose. Male hands holding a sieve and throws up soybean grains.

Image used for illustrative purpose. Male hands holding a sieve and throws up soybean grains.

Gettyimages

SINGAPORE - Chicago soybean futures lost more ground on Thursday, with the market dropping to its lowest in almost a month, as doubts emerged about China's demand for U.S. supplies as promised in a trade deal between the two countries.

Wheat slid after climbing for the last two sessions, while corn fell for a third day.

The United States and China on Wednesday signed the Phase 1 trade deal, meant to reduce tensions after nearly two years of a tit-for-tat tariff war.

However, China's pledge to buy U.S. farm goods based on "market conditions" during the deal signing ceremony added to doubts among farmers and commodity traders over Beijing's lingering tariffs on U.S. exports.

"China's market conditions might not be favourable for soybeans, given the number pigs left after African swine fever," said Phin Ziebell, agribusiness economist at National Australia Bank.

"Soybean purchases are unlikely to be strong. There is not much upside potential for prices."

The most-active soybean contract on the Chicago Board Of Trade was down 0.2% to $9.26-1/2 a bushel by 0306 GMT, near the session low of $9.25 a bushel - the weakest since Dec.

Soybeans closed down 1.4% on Wednesday.

Wheat was down 0.4% to $5.70-3/4 a bushel, having closed up 0.8% on Wednesday, when prices hit their highest since August 2018 at $5.79.

Corn futures lost 0.4% to $3.86 a bushel, having closed down 0.4% in the previous session.

The centrepiece of the trade deal is a pledge by China to purchase at least an additional $200 billion worth of U.S. farm products and other goods and services over two years, above a baseline of $186 billion in purchases in 2017, the White House said.

Millions of pigs have died or been culled in China as African swine fever has spread across the country.

The National Oilseed Processors Association reported U.S. soyoil stocks ballooned to 1.757 billion pounds by the end of December, up 21% from the previous month and topping trade expectations.

The wheat market has been supported by tightening supplies in the Black Sea region with Russia planning to restrict exports.

France's farming agency increased its forecast of soft wheat shipments outside the European Union this season for a fourth month in a row, but warned month-old transport strikes could cost the country exports as grain supplies fail to reach ports.

Commodity funds were net sellers of CBOT soybean, corn, soyoil and soymeal futures contracts on Wednesday and net buyers of wheat, traders said.    

(Reporting by Naveen Thukral; Editing by Subhranshu Sahu)

© Reuters News 2020

More From Commodities