Soybeans ease after surge as US-China tariffs assessed

PARIS/SYDNEY: Chicago soybean futures fell on Monday, giving up some of their gains from a bargain-buying rally before the weekend, with investors assessing potential disruption from Chinese tariffs on US supplies.

Favourable growing conditions in the US Midwest also weighed on soybeans and corn before weekly government crop ratings later on Monday, and monthly supply and demand forecasts on Thursday.

Wheat tracked the weaker trend in corn and soy which offset recent concern about deteriorating wheat production prospects in Europe and the Black Sea region.

"Grain markets are lower as traders take profits after the sharp rally on Friday," US brokerage Allendale said in a note. "Trade war news will also be a factor as the possibility of further tariffs being imposed remains."

The most active Chicago Board of Trade soybean futures eased 1.2 percent to $8.84-1/4 a bushel by 1134 GMT.

Soybeans jumped 4.5 percent on Friday after nearing a decade low as tit-for-tat import tariffs by Washington and Beijing took effect.

Higher than expected weekly export sales, reported on Friday, encouraged the rebound by suggesting US soybeans were finding alternative destinations as Brazilian exports were becoming relatively expensive.

Expectations that Beijing's extra 25 percent tariff on US soybeans will shift more sales to Brazil, the world's top exporter, has contributed to a five-year high in the spread between US and Brazilian prices.

"This makes US soybeans attractive for buyers outside China, though it is doubtful whether they can make up for the lack of Chinese demand," Commerzbank analysts said in a note.

"The US Department of Agriculture is therefore likely to revise its forecast for US soybean exports in the coming crop year significantly downwards."

USDA may revise its export outlook as part of its monthly supply/demand forecasts on July 12. Analysts polled by Reuters on average expect USDA to raise projections for 2018/19 production and carryover stocks of both corn and soybeans.

Good growing weather so far has boosted harvest expectations for US corn and soy.

"Satellite imagery over every major state in the US Midwest showing record high vegetation density for corn and soybeans, indicating massive yield potential," Thomson Reuters Agriculture Research analysts said.

The most active CBOT corn futures were down 1.1 percent at $3.68-3/4 a bushel, while wheat slipped 1.2 percent to $5.09-1/4 a bushel.

Wheat prices had been supported in the past week by reduced forecasts for harvests in the European Union and the Black Sea region following harsh spring weather.