Soybeans fall as China purchases underwhelm; corn ends higher

CHICAGO: US soybean futures fell on Friday for a second session as traders reacted to smaller-than-expected purchases this week by China coupled with ballooning global supplies, traders said.

Corn futures firmed on prospects for China to start buying US supplies of the yellow grain, while wheat declined, consolidating a day after reaching a near two-month high.

Chicago Board of Trade (CBOT) January soybeans settled down 6-1/2 cents at $9.00-1/2 per bushel, March corn ended up 1/2 cent at $3.84-3/4 a bushel while March wheat fell 6 cents at $5.30 a bushel.

The most-active soybean contract struck a near six-month high on Wednesday, while spot January futures reached a 4-1/2-month top, as traders reported China had booked its the first sizeable purchases of US soybeans in more than six months after a US-China truce in a tit-for-tat tariff war.

But the rally fizzled after the US Department of Agriculture (USDA) on Thursday confirmed 1.13 million tonnes of US soybeans sold to China, and on Friday confirmed another 300,000 tonnes sold to China plus 130,000 tonnes sold to unknown destinations.

Rumors had swirled this week of even larger Chinese purchases of several million tonnes.

"The talk was bigger than the actual sales," said Don Roose, president of Iowa-based US Commodities.

"Part of the issue is that the supply side of the bean market is just flat-out bearish, in the US and the world," Roose added, noting projections for huge domestic and global soy inventories.

The USDA on Tuesday left unchanged its forecast for US soybean stocks at the end of the 2018-19 marketing year at a record-high 955 million bushels, doubling from a year earlier.

And a likely record-large soybean crop is developing in Brazil.

CBOT corn futures firmed on ideas that China might start buying US corn in addition to soybeans.

"Corn is now entering the discussion for possible export business to China in early 2019," INTL FCStone chief commodities economist Arlan Suderman wrote in a client note, adding, "Corn futures are modestly higher on the prospect of exports."

However, farmer sales were curbing rallies as the end of the year approached and CBOT March corn futures flirted with a five-week high recorded on Wednesday at $3.87-3/4 a bushel.

"As you move up (in price) and move closer to end of the year, that producer selling picks up. And that's the anchor," Roose said.

CBOT wheat eased one day after the March contract hit its highest in nearly two months. Rising global wheat prices and signs of improving export demand for US supplies underpinned the market.

Russia's 2018 wheat harvest totalled 70 million tonnes, Interfax news agency cited the agriculture ministry's first deputy head as saying.

Russia's agriculture ministry will hold a meeting with grain exporters on Dec. 21, Interfax said on Thursday.