Soybeans and grain prices fall as Middle East tensions are in the spotlight

Chicago soybean futures slipped lower on Monday as they unraveled gains made after crude oil prices rose on fears that a U.S. strike on Iranian nuclear facilities would disrupt supply.

By 1128 GMT, the most active soybean contract had fallen 0.2% to $10.58-3/4 a bushel. Soyoil rose 0.8% to $54.9 cents per pound.

The oil price surged in the early trade after the U.S. attacked Iranian nuclear sites on the weekend. As a biofuel, soyoil prices are closely linked to crude oil because it is used as a replacement for fossil fuel.

The weak demand for U.S. soya beans and the ample global supply are putting pressure on prices.

Andrew Whitelaw, Episode 3's agricultural consultant, said that "fundamentally not much has changed" since the end the week. "Speculators have reduced their net short positions. This is not surprising given the uncertainty surrounding the attacks by Israel and the U.S. on Iran."

Analysts and traders are watching for Iran's reaction to the U.S. strike.

The concern is now about the retaliation of Iran and its proxy forces in the region. Whitelaw said that if there were concerns about supply chains, the market could rally even more as crude oil prices rose.

Data released on Friday showed that imports of soybeans from Brazil to the world's largest buyer, China, grew 37.5% in December compared to a year ago, as buyers snatched up South America’s bumper crop. The United States' supplies also increased 28.3%.

Corn fell 1.2%, to $4.23-3/4 a bushel. This is its lowest price since mid-November. Favorable weather conditions in the U.S. Midwest have improved crop prospects and pushed prices up.

After last week's strong rally, wheat was down 0.3% at $5.82 per bushel. The U.S. winter harvest is also accelerating.

Traders said that commodity funds sold futures contracts of Chicago Board of Trade corn, wheat, soybeans, soyoil, and soymeal on Friday, while buying soymeal. Reporting by Ella Cao in Beijing, Lewis Jackson in Paris and Sybille De La Hamaide in Beijing; Editing and rewriting by Rashmi aich, Vijay Kishore, and Barbara Lewis

(source: Reuters)