Soy, wheat decline on persistent demand worries, ahead of USDA data

CHICAGO: US soy and wheat futures fell on Monday on positioning ahead of a monthly US Department of Agriculture crop supply/demand report and uncertainty about the ongoing US-China trade dispute, traders said.

A higher dollar added pressure, making US grains less competitive on global markets. But corn was choppy, supported at times on private exporters selling more than 1.6 million tonnes of US corn to Mexico.

As of 1:13 p.m. CST (1913 GMT), Chicago Board of Trade March soybeans were down 6 cents at $9.23 per bushel. CBOT March wheat was off 6-1/4 cents at $5.25 a bushel, and March corn fell 1-1/2 cents at $3.84.

"The ags have largely been stagnant thus far today, facing modest headwinds from the outside markets, with traders also being cautious ahead of tomorrow's USDA crop report," INTL FCStone chief commodities economist Arlan Suderman wrote in a client note.

Analysts, on average, expected only modest changes on Tuesday in the USDA's monthly forecasts of US soy, corn and wheat ending stocks for the 2018-19 marketing year.

The USDA last month trimmed its forecast of US 2018-19 soybean exports to 1.9 billion bushels from 2.06 billion. Some think the final US soy export figure will be lower, given the virtual halt in purchases by top buyer China.

"USDA is overdoing it, I think, as far as corn and soybean exports this year," said Brian Hoops of Midwest Market Solutions. "That may be a number that we are not able to reach this marketing year."

The US-China trade row continued to hang over the market.

US-China trade negotiations need to reach a successful end by March 1 or else new tariffs will be imposed, US Trade Representative Robert Lighthizer said on Sunday, stressing the "hard deadline" after a week of seeming confusion from Washington.

Highlighting the impact of the standoff, China imported 5.38 million tonnes of soybeans in November, the lowest monthly amount in two years, customs data showed on Saturday.

China, the world's largest soybean importer, this year put extra tariffs on US soybeans, causing shipments of US supplies to dry up.

"Soybeans remain under the influence of diplomatic relations between the US and China," consultancy Agritel said in a note.

CBOT corn found underlying support after the USDA confirmed that private exporters sold 1,645,920 tonnes of US corn to Mexico, including 1,104,900 tonnes for delivery in the 2018-19 marketing year that began Sept. 1.

However, the market was unable to stay in positive territory.

Wheat futures declined on technical selling and profit-taking after the CBOT March contract on Friday hit a 5-1/2-week high on larger-than-expected weekly US export sales.

Traders have been waiting for signs that dwindling supplies in the Black Sea region, which includes top wheat exporter Russia, will spur more demand for US wheat.