Corn eases as market weighs US supply surge, Chinese demand

• Soybeans were almost flat as the oilseed market remained underpinned by a run of U.S. sales to China.

PARIS/SINGAPORE: Chicago corn edged lower on Wednesday as traders assessed a U.S. government outlook calling for a surge in supplies next season and signs of renewed demand from China.

Soybeans were almost flat as the oilseed market remained underpinned by a run of U.S. sales to China.

Wheat extended a run of losses as rainfall in Europe and the Black Sea region eased crop concerns.

The most-active corn contract on the Chicago Board of Trade  (CBOT) was down 0.5% at $3.20-1/2 bushel by 1229 GMT.

The U.S. Department of Agriculture projected U.S. corn ending stocks at 3.318 billion bushels for the 2020/21 marketing year, the largest since 1987/1988, as falling demand for corn-based ethanol and animal feed due to the COVID-19 pandemic coincided with massive expected plantings.

At the same time, the USDA gave a smaller-than-expected estimate of 2019/20 corn inventories.

"Traders continue to digest yesterday report numbers while turning their focus to demand and weather maps as growers continue to make strong progress in the fields," brokerage Allendale said in a note.

The risk of sustained weakness in demand for corn-based ethanol fuel was being set against signs of increased Chinese demand for U.S. crops.

China is allocating more low-tariff import quotas for corn this year and may expand its use of wheat quotas as it seeks to step up farm purchases from the United States and meet a pledge to comply with global trade rules, three sources told Reuters.

The USDA has in the past week reported sales of U.S. soybeans and corn to China.

CBOT soybeans inched up a quarter of a cent to $8.52-1/4 a bushel while wheat slipped 0.9% to $5.09-3/4 a bushel.

The USDA raised its forecast of 2019/20 soybean ending stocks to 580 million bushels, up from 480 million last month and above the highest in a range of trade expectations.

But the agency projected soybean stocks falling to 405 million bushels by the end of 2020/21, below an average estimate of 430 million in a Reuters survey.

The USDA also raised its forecast of 2019/20 world wheat ending stocks to 295.12 million tonnes, from 292.78 million last month, and projected that 2020/21 world stocks would climb to 310.12 million tonnes.

The wheat market also remained capped by expectations that recent rain across Europe has limited crop stress from a dry start to spring, including in major Black Sea exporting countries Russia and Ukraine.