U.S. grains: Soybeans hit two-month low on huge Brazil crop

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures hit a two-month low on Thursday, pressured by rising government forecasts for a record-large Brazilian soy harvest, traders said.

Corn futures also declined on forecasts for big South American crops, and wheat followed the weak trend.

The Chicago Board of Trade May soybean futures contract settled down 10-3/4 cents at $10.11 per bushel after dipping to $10.06-1/4, its lowest since Jan. 10 (all figures US$).

CBOT May corn ended down 5-1/4 cents at $3.67 a bushel after setting a five-week low at $3.66. May wheat finished down 3 cents at $4.44 a bushel.

Soybeans fell after the U.S. Department of Agriculture in a monthly supply/demand report hiked its forecast of Brazil’s 2016-17 soybean harvest to a record 108 million tonnes, from 104 million in February.

USDA also cut its estimate of U.S. 2016-17 soybean exports, citing competition from the big Brazilian crop, and consequently raised its forecast of U.S. soy ending stocks to 435 million bushels, above an average of analyst estimates.

“USDA finally recognized that second-half U.S. exports are not going to be as large as what they were hoping because of larger and larger South American crops,” said Terry Reilly, senior commodities analyst at Futures International.

USDA’s moves came hours after Brazil’s agricultural statistics agency, Conab, raised its estimate of the country’s soy crop to 107.6 million tonnes, up from 105.5 million tonnes previously.

CBOT corn futures fell as the USDA upped its estimates of corn output in Brazil as well as Argentina. USDA raised its forecast of global 201617 corn ending stocks to 220.68 million tonnes, above an average of trade expectations and up from 217.56 million last month.

“We probably just bought a touch more (U.S.) corn acres today, given the decrease in the soybean/corn ratio and also the realization that there’s a record amount of beans on hand for the next 24 months across the globe,” Reilly said.

Wheat futures found underlying support after USDA trimmed its forecast of U.S. 2016/17 wheat ending stocks to 1.129 billion bushels, down 10 million from last month. But forecasts calling for much-needed moisture in the Plains kept a lid on rallies.

“The wheat market was penalized by weather forecasts predicting the return of rains in big U.S. regions of production hit by a hydric deficit,” consultancy Agritel said.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.

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