Prices slip as US-China row adds to demand worries

• Corn fell 1.6% to $3.13-1/2 a bushel, trading near a 10-1/2 year low of $3.09 struck two weeks ago.
• CBOT wheat shed 1.7% to $5.08 a bushel after setting a six-week low of $5.05-3/4 as it approached the psychological $5 threshold.

PARIS/SINGAPORE: Chicago grain futures slid for a second session on Monday as rising tensions between Washington and Beijing raised concern about further demand risk after coronavirus disruption to biofuel and livestock feed markets.

Favourable crop weather also weighed on prices as corn planting advanced in the U.S. Midwest while rain that broke a dry spell across Europe looks set to reach Russia's crucial southern export zone this week.

Equities and oil prices fell on Monday as a U.S.-China spat over the coronavirus outbreak fuelled fears of a new trade war, only months after the world's two largest economies signed an agreement to defuse a tariff battle.

U.S. President Donald Trump on Thursday said that the Phase 1 trade deal with China was now of secondary importance to the coronavirus pandemic and threatened new tariffs over the outbreak.

Agriculture was a key part of the trade pact signed in January, raising hopes that China, the world's biggest soybean importer, would ramp up purchases of U.S. supplies.

"Grain markets pulled back as the U.S.-China trade dispute heats up," brokerage Allendale said in a note. "Traders will continue to monitor the spread of the virus as well as any improvements in the U.S.-China trade dispute."

The coronavirus pandemic has already dented grain prices by shredding demand for crop-based biofuel and threatening to curb consumption of livestock feed after the closure of some meat factories.

The most active soybean contract on the Chicago Board of Trade was down 1.4% at $8.37-1/2 a bushel by 1158 GMT.

Corn fell 1.6% to $3.13-1/2 a bushel, trading near a 10-1/2 year low of $3.09 struck two weeks ago.

CBOT wheat shed 1.7% to $5.08 a bushel after setting a six-week low of $5.05-3/4 as it approached the psychological $5 threshold.

Rain relief for northern hemisphere crops kept wheat under pressure, despite concern about underlying drought in some major growing belts.

"Weather forecasters are looking for rain to relieve some of the worries about winter wheat crops in the U.S., Europe and around the Black Sea," said Tobin Gorey, director of agriculture strategy at Commonwealth Bank of Australia.

"Forecasters, in summary, are looking at the dry areas of these regions to shrink somewhat over the next week or so. The shrunken dry area, though, is still large enough to worry the wheat market."