US weather, trade fears hit prices; corn at new lows

PARIS/SINGAPORE: Chicago grain and soybean futures fell on Wednesday, with corn setting fresh contract lows, as favourable US crop conditions and concern about a deepening trade dispute between the United States and China weighed on prices.

Washington's detailing of products to be covered by a 10 percent tariff on an extra $200 billion worth of Chinese imports pushed share and metal prices to their lowest in a year.

The hardening standoff has put particular pressure on soybeans as the most valuable US agricultural export to China, which is the world's largest importer of the oilseed widely used in livestock feed.

The president of state grains trader COFCO was quoted on Wednesday as saying China could reduce reliance on US soybeans by increasing imports of soybeans from other countries, or other oilseeds, or meat directly.

"We have a bearish sentiment in the agricultural markets as it looks like the trade war is escalating and this is hitting US soybean exports to China," said Phin Ziebell, an agribusiness economist with National Australia Bank.

"US weather looks good for corn as well as soybeans."

The most-active soybean contract on the Chicago Board of Trade was down 1.8 percent at $8.56-1/4 a bushel by 1200 GMT.

The most active corn reference lost 1.0 percent to $3.57 a bushel. Individual delivery months again set life-of-contract lows, with September corn falling to $3.43.

Wheat dropped 1.5 percent to $4.84-3/4 a bushel, adding to a 3 percent slide on Tuesday.

Forecasts for a favourable mix of rain and moderate heat in the week ahead in the US Midwest has underscored the prospect of a bumper corn harvest and bolstered expectations that the US Department of Agriculture (USDA) will raise its production forecast in a monthly crop report on Thursday.

The USDA lowered its crop condition ratings for corn and soybeans only slightly for the past week, with ratings for both crops holding near historical highs.

The improved condition of US spring wheat, with last week's ratings exceeding trade estimates, has helped dampen wheat prices and fuelled expectations the USDA may also raise its US wheat production forecast.

Wheat markets had been supported in the past month by deteriorating harvest prospects in Europe and the Black Sea region due to harsh spring weather.

However, a government forecast in France on Tuesday for only a slight drop in common wheat production this year, followed by an upward revision to wheat stocks by the country's farming agency on Wednesday, eased supply worries.