June 5, 2019 / 3:00 PM / 4 months ago

GRAINS-U.S. grain futures slump as fears ease over weather planting slowdown

* Market fears ease over widespread crop damage

* Corn follows wheat lower; soybeans edge down (Recasts, updates with U.S. trading, new quotes, new headline, changes byline/dateline; pvs SYDNEY/PARIS)

By P.J. Huffstutter

CHICAGO, June 5 (Reuters) - U.S. grain futures fell across the board in early trading on Wednesday, as fears eased about the potential for rain damage to the wheat crop and forecasts of warmer temperatures in the U.S. Midwest opened a narrow planting window for soybean farmers.

Wheat futures dipped to near a one-week low, as the world wheat market continued to take profits from the recent weather-related rally, traders said.

The market had been worried about crop damage after the recent heavy rains, but the U.S. Department of Agriculture crop report showed an improvement in the quality. Those worries, however, are beginning to ease after the USDA said U.S. winter wheat looked good and rain was forecast for the Black Sea region, which has faced hot and dry weather.

“This is a classic wheat-led rally being driven by the funds,” said Mike Zuzolo, president of Global Commodity Analytics. “The funds are back in control of this market.”

The most-active wheat contract on the Chicago Board of Trade was down about 1% at $5.02-1/2 a bushel by 9:19 a.m. CDT (1419 GMT). It earlier hit a session bottom of $4.92-3/4, the lowest since May 30. In the previous session, wheat declined 2.4%.

The most-active corn futures were down 1.53% at $4.18-3/4 a bushel, while soybeans dipped 0.48% to $8.77-1/2.

Traders said corn was being pulled down by wheat, but also feeling pressure from ongoing planting delays across the U.S. Midwest.

News that U.S. feed operations in the Southeast are beginning to import South American corn also was seen as bearish to the corn market.

Reuters reported on Tuesday that Archer Daniels Midland Co and other grain traders were selling Brazilian corn to Smithfield Foods Inc in the United States, where wet weather has reduced plantings.

One source said Smithfield Foods likely ordered between five and 10 corn shipments from Brazil, which are expected to be loaded onto ships between September and January.

Adding to the bearish outlook is U.S. President Donald Trump’s proposal to slap new tariffs on Mexican-made goods starting June 10, if Mexico does not halt the flow of illegal immigration, largely from Central America, across the U.S.-Mexican border.

Mexico is a top buyer of U.S. corn. Those tariffs would gradually rise to 25% by Oct. 1 if Mexico does not satisfy Trump’s demands.

Despite the slip in corn futures prices, traders said corn prices remained underpinned by ongoing concerns over slow planting in the United States.

The USDA said in a report after the market close on Monday that U.S. corn planting was 67% complete, below market expectations of 71% and well below the average pace of 96% at this time of year.

Additional reporting by Colin Packham in Sydney and Sybille de La Hamaide in Paris. Editing by Dale Hudson and Steve Orlofsky

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