GRAINS-Chicago soybeans drop on abundant global supply, weak demand

Chicago soybean futures declined on Monday due to a combination of global surpluses, weak demand, and a benign climate in the Midwest.

By 0252 GMT, the most active soybean contract traded on the Chicago Board of Trade dropped 0.29% to $10.00 per bushel.

The large U.S. crops and the global crops that are coming soon will continue to put pressure on soybeans. Ole Houe is the director of advisory services for IKON Commodities, Sydney. He said that it's unlikely for this market to see any significant improvement in the coming months.

The weak export demand has further weighed down on soybeans. Recent weekly U.S. sales of exports hovered at the lower end trade estimates.

Corn prices fell by 0.44%, to $3.98 per bushel. This was due to a softening of global demand, and the expectation for a large U.S. crop, supported by favorable weather conditions in Midwest crop belt.

Wheat fell 0.19%, to $5.37 per bushel as harvests in the Northern Hemisphere increased global supply.

"Wheat stands out as the only commodity where US prices are low enough to draw global demand. Houe stated that wheat prices are more likely to rise than fall further.

On Sunday, the United States, along with the European Union, reached a framework agreement for trade, which imposed a 15% tariff on the import of most EU goods, and avoided a larger trade war between these two allies, who account for nearly a third the global trade.

The South China Morning Post reported Sunday that Beijing and Washington are expected to extend the tariff truce for another three months during trade talks beginning Monday in Stockholm.

Also, traders were taking positions in advance of the Trump Administration's deadline for tariffs on August 1.

Last Friday, China's agriculture ministry issued a warning that drought and high temperatures could persist in certain parts of the nation and negatively impact the harvest. Reporting by Ella Cao, Lewis Jackson and Subhranshu S. Sahu

(source: Reuters)