Corn, soybeans sag on renewed US-China trade jitters

CHICAGO: US corn futures fell nearly 2 percent on Tuesday, with the front contract dropping below $4 a bushel as US trade tensions with China re-emerged, analysts said.

Wheat turned lower after climbing to multi-month highs, and soybeans also slipped.

As of 1 p.m. CDT (1800 GMT), Chicago Board of Trade July corn was down 7-3/4 cents at $3.98-1/4 per bushel. July wheat was down 8 cents at $5.35 a bushel and July soybeans were down 9-1/2 cents at $10.32 a bushel.

Corn tumbled after the United States said it will continue pursuing action on trade with China, days after Washington and Beijing announced a tentative solution to their dispute and suggested that tensions had cooled.

China is the world's biggest soybean importer and the top buyer of US sorghum, a feed grain that competes with corn.

The news appeared to trigger long liquidation in corn and soybeans, markets in which commodity funds hold net long positions.

A stronger dollar added to the negative tone, making US grains less competitive on the world market.

"The dollar strength is a real anchor for all the trade. Then you get kicked with the China trade headlines," said Don Roose, president of Iowa-based US Commodities.

Also, traders believe the US corn crop is off to a good start, overcoming early planting delays in April. Ahead of the US Department of Agriculture's weekly crop progress report, analysts on average expected the government to rate 72 percent of the crop in good to excellent condition, up from 65 percent a year ago.

Wheat followed corn and soy lower, retreating after the CBOT July contract hit a 10-month high on concerns about dry weather in Russia and elsewhere.

Forecasts for beneficial rains in the northern US Plains spring wheat belt and possibly Canada added pressure.

Soybeans declined but drew underlying support from logistics problems in Brazil, where a truckers' strike has been slow to unwind, even after the government agreed to subsidize diesel prices in a bid to end protests.

Soybean exporters are considering declaring force majeure on shipments, a contractual clause that releases them from obligations because of events beyond their control, according to Anec, a trade group representing grains exporters such as Archer Daniels Midland Co and Louis Dreyfus Co.

"If it were not for the Brazilian strike woes going on, beans could be much lower than they are," Futures International analyst Terry Reilly said.