Corn, soy slip again on drier weather outlook, US-China tensions

PARIS/SINGAPORE: Chicago corn and soybeans eased for a second session on Thursday as forecasts for drier weather next week in the US Midwest raised hopes farmers will catch up on delayed planting, while US-Chinese trade tensions again dampened investor sentiment.

Wheat similarly fell for a second day, with expectations for ample global supply in the upcoming season curbing prices.

The most-active corn contract on the Chicago Board of Trade had eased 0.7 percent to $3.61-3/4 a bushel by 1035 GMT.

CBOT soybeans were down 0.4 percent at $8.24 a bushel and wheat 0.5 percent lower at $4.36-3/4 a bushel.

Corn prices came under pressure as the US National Weather Service forecast below-normal rainfall in the Midwest next week, raising the prospect that rain-delayed planting may pick up.

"On the upside, mostly dry weather is expected across the Midwest between 10-19 May, which should help the (planting) pace rebound," Refinitiv Agriculture Research analysts said in a note.

However, showers forecast this week could keep field work slow in most corn and soybean zones, although the Northern Plains may benefit from continued dryness, they said.

The US Department of Agriculture (USDA) said on Monday that 23 percent of this year's corn crop had been planted, versus the five-year average pace of 46 percent.

Renewed tensions in US-Chinese trade discussions, aimed at resolving a year-long tariff battle, were weighing on financial markets at large.

Soybeans in particular were under pressure as the single most valuable US agricultural export.

US President Donald Trump is planning to raise tariffs on Chinese goods on Friday, citing Beijing's backtracking on commitments made during the talks.

China is fully prepared to defend its interests in its trade war with the United States, the Chinese commerce ministry said on Thursday as Chinese officials prepared to enter a latest round of talks in Washington.

"We, and many others, think that there is probably not enough time to avoid the tariff imposition on Friday," said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.

"But that of itself will not de-rail the negotiations."

China's soymeal futures rallied more than 2 percent on Thursday in their biggest daily gain since October 2018, amid renewed Sino-US trade tension.

In its first outlook for 2019 crops, the United Nations' Food and Agriculture Organization (FAO) projected world cereal output would rise 2.7 percent.

Wheat production would climb 5 percent, supported by a jump in Russian output to 82 million tonnes, it said.

Traders were also turning their focus to Friday's monthly supply and demand figures from the USDA, in which the agency is expected to confirm large US inventories of wheat, corn and soybeans.