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GRAINS-Soybeans bounce after hitting new lows on trade war fears
* USDA cuts 2018-19 U.S. soy export forecast, raises stocks
* Worsening U.S.-China trade conflict dents soybean demand
* Corn bounces from contract lows, wheat up after 8 pct drop (Recasts with soybeans recovering losses, adds closing prices)
By Karl Plume
CHICAGO, July 12 (Reuters) - U.S. soybean futures fell to contract lows on Thursday after the U.S. Department of Agriculture said a trade war with China would curb exports and swell supplies, but the market clawed back those losses late in the session in a short-covering bounce.
Corn rallied from earlier contract lows as the USDA, in a monthly supply and demand report, raised its U.S. export forecast enough to offset a larger harvest outlook.
Wheat also jumped after the USDA raised its U.S. wheat export projection and lowered its production forecasts for key European suppliers.
In its monthly report, the USDA cut its forecast for U.S. soybean exports in the 2018-19 (Sept/Aug) season by 250 million bushels, sending end-of-season stocks to a record 580 million bushels, which topped all trade forecasts.
The agency said the adjustments were triggered by a deepening trade conflict with top importer China, which raised import duties on U.S. soybeans by 25 percent last Friday.
"USDA is clearly indicating that there's going to be a lot of soybeans and that we hurt our demand base, on a worldwide basis," said Jack Scoville, analyst at The Price Group.
China on Thursday cut its forecast for soybean imports in 2018-19 by 1.8 million tonnes to 93.85 million, warning that higher prices due to the trade conflict with the United States would curb demand as farmers switch to alternative animal feed ingredients.
Chicago Board of Trade August soybeans closed 3/4 cent higher at $8.33-3/4 a bushel while new-crop November soybeans gained a penny to close at $8.49-1/4 a bushel. All contracts through January 2020 posted life-of-contract lows.
CBOT September corn rose 5-3/4 cents to $3.45-3/4 a bushel, rebounding from an earlier contract low of $3.37-1/4.
The USDA increased its estimate for U.S. plantings this season, sending production up by 190 million bushels. But the agency more than offset that by lifting its projections for exports and use by the domestic animal-feed sector.
CBOT September wheat jumped 12-3/4 cents to $4.84-1/2 a bushel after a three-day slump had dragged prices to a 5-1/2-month low the previous day.
Wheat has been curbed by favorable weather for spring crops in the northern U.S. Plains, but falling expectations for harvests in Europe and the Black Sea region remain supportive to prices.
The USDA cut its world wheat stocks projection by 5.28 million tonnes on smaller crops in the EU, Australia and the Black Sea region. (Additional reporting by Gus Trompiz in Paris, Naveen Thukral in Singapore and Michael Hirtzer in Chicago; Editing by Mark Potter and Will Dunham)
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