* Argentine tax hike also supports CBOT soybeans
* Gains in financial markets set positive tone
* Wheat resumes downward trend after bounce Tuesday (Adds closing prices)
By Tom Polansek
CHICAGO, March 4 (Reuters) - U.S. soybean futures rose for a third day on Wednesday, nearing a six-week high, on hopes for increased export demand and spillover support from gains in financial markets.
Corn futures set a five-week high, while wheat futures slumped.
Traders said U.S. soy exports may benefit from an increase in taxes on soybean, soyoil and soymeal exports in rival supplier Argentina.
The increase will drive down farm investment and likely result in smaller harvests going forward in Argentina, farmers and economists said. Argentine farmers will also probably store soybeans because of the taxes, instead of selling them on the global market, said Brian Hoops, president of U.S. broker Midwest Market Solutions.
“It gives us a chance to sell a bit more,” he said.
The United States faces stiff competition for soy exports from South America, particularly Brazil, where farmers are expected to harvest a massive crop.
China, the world’s top soybean importer, buys soybeans from Brazil at this time of year. But China is expected to come into the U.S. market in the late spring and summer, U.S. Agriculture Secretary Sonny Perdue told Congress.
Grain traders on Thursday will review weekly U.S. export sales data for signs of Chinese demand.
The most-active soybean contract on the Chicago Board of Trade ended up 0.4% at $9.07-1/4 a bushel. The contract earlier rose to $9.11, its highest since Jan. 23.
Gains in financial markets helped to set a positive tone after agricultural markets sagged last week on concerns about the global spread of coronavirus hurting economic growth, traders said.
The U.S. Federal Reserve’s rate cut on Tuesday is among several measures from policymakers to counter the impact of the virus, which originated in China late last year and has since upended global supply chains, travel and production.
“The spread of the coronavirus seems to have, at least temporarily, taken a back seat to the potential for lower interest rates,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
CBOT March corn closed 1.4% higher at $3.87 a bushel, while the most-active May contract rose 1% to $3.85.
The nearby March corn contract topped May futures because of strong cash prices and limited available supplies due to slow farmer selling, analysts said. There were no deliveries against the CBOT March corn contract.
Most-active CBOT wheat finished 1.7% lower at $5.18-1/4 a bushel. Estimates for large global wheat output helped curb wheat prices, analysts said.
Reporting by Tom Polansek in Chicago. Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Emelia Sithole-Matarise, Steve Orlofsky and Diane Craft