Chicago | Reuters –– U.S. soybeans rebounded on Monday on technical buying and short covering after hitting a 6-1/2-year low following the weekend election in Argentina of a president who has promised to cut export taxes and boost production.
Corn and wheat prices on the Chicago Board of Trade recovered from earlier losses tied to broad selling across commodities markets, also lifted by short covering and technical buying.
The 19-commodity Thomson Reuters/Core Commodity CRB Index touched its lowest level since November 2002 on Monday on concerns about China’s economy and the impact of a strengthening U.S. dollar before rebounding as crude oil bounced.
The firm dollar remained a bearish factor for grains, creating headwinds in export markets where dollar-denominated commodities become more expensive for buyers holding other currencies.
Conservative opposition candidate Mauricio Macri comfortably won Argentina’s presidential election on Sunday after promising business-friendly reforms to spur investment in the struggling economy.
Argentine grains output would shoot 30 per cent higher by 2019 as Macri is expected to make good on his vow to cut export taxes and state controls that have weighed on production, his farm advisor said in an interview earlier this month.
“In the short term, the trade assumes this is bearish beans as there are some beans waiting to be exported,” said Rich Nelson, chief strategist with Allendale Inc.
“In the longer term, years two or three or four of his presidency, is when we may see some effects from changes in crops and we could see more corn and wheat production at the expense of soybeans,” he said.
CBOT January soybeans gained 6-3/4 cents, or 0.8 per cent, to $8.64-1/4 a bushel after earlier hitting a contract low of $8.44-1/4, the lowest spot contract price since March 2009. It was the contract’s biggest percentage gain in a month.
December corn rose four cents to $3.67-1/4 a bushel, a 1.1 per cent gain that was the contract’s largest in nearly a month.
CBOT December wheat gained 6-1/2 cents, or 1.3 per cent, to $4.95 a bushel. Hard red winter wheat futures posted contract lows before recovering, with December up 7-1/2 cents, or 1.6 per cent, at $4.64-1/2 a bushel.
Gains in both corn and wheat remain restricted by sluggish U.S. exports, which are lagging the normal pace amid ample global supplies of often-cheaper grain.
Beneficial precipitation in key wheat-producing areas of the U.S. also capped gains in wheat.
— Karl Plume reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.