CANBERRA: Chicago soybean futures fell on Thursday and hovered just above three-year lows as the ongoing harvest in top producer Brazil poured cheap beans into an already well-supplied market.
Corn futures rose — their fifth straight daily gain from a three-year low last week — but analysts say this is largely due to short-covering by speculative investors and plentiful supply will continue to pressure prices.
Wheat also moved higher despite forecasts for large Russian production that are keeping a lid on gains. The most-active soybean contract on the Chicago Board of Trade (CBOT) was down 0.4% at $11.40-3/4 a bushel by 0527 GMT after dropping to $11.34 on Monday and Wednesday, the lowest since November 2020.
“Supplies coming out of South America are pressuring the market,” said Andrew Whitelaw at agricultural consultants Episode 3. “We expect a continued bearish environment.”
Industry association Abiove cut its estimate for Brazil’s 2024 soybean output for the second time this month to 153.8 million metric tons due to adverse weather. But even with the downgrade, Brazilian production will be close to last year’s record crop of around 159 million tons, and Argentina, which begins harvesting in April, expects a bumper crop.
“Brazilian production in the 150 million metric ton range and Argentina around 50 million metric tons still leaves total South American output at 15+ million metric tons better than any season prior,” StoneX analyst Arlan Suderman wrote in a note.
CBOT corn was up 0.2% at $4.29-1/2 a bushel, having slid last week to $4.04-1/4, the lowest since November 2020, while wheat rose 0.5% to $5.77-1/2 a bushel and was not far from September’s three-year low of $5.40. Speculative investors are betting on further declines for CBOT soybeans, corn and wheat, but their huge short positions leave the markets prone to episodes of short-covering that push up prices.
Funds were net buyers of CBOT corn and soybean futures on Wednesday and net sellers of wheat, traders said. “Wheat and maize prices are expected to continue falling on positive supply developments,” analysts at HSBC wrote in a note.
Ukraine’s grain exports so far in February have exceeded last year’s level by almost 12%, reaching 5.3 million metric tons, agriculture ministry data showed. The South African government said farmers there are expected to harvest 14.36 million metric tons of maize (corn) in the 2023/2024 season, down from 16.43 million the year before. The US Department of Agriculture (USDA) will issue weekly grain and soy export sales data on Thursday.
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