U.S. grains: Futures notch yearly rises on China demand hopes

CBOT March 2020 wheat with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. wheat, corn and soybean futures posted annual gains in 2019 after an initial U.S.-China trade deal that could boost agricultural exports helped prices rally toward the end of the year.

The crop futures finished little changed on Tuesday as markets wound down during the last session of the year and awaited further details on the agreement struck this month between Washington and Beijing.

U.S. President Donald Trump said Phase 1 of the trade deal would be signed on Jan. 15 at the White House and that he would later travel to Beijing to begin talks on the next phase.

Phase 1 includes a commitment by Beijing to buy more U.S. agricultural products, although details have not been announced.

China is the world’s biggest soybean importer, and the agreement helped revive soybean futures, which fell to a 10-year low in May because of demand worries caused by the trade dispute. Traders are still waiting to see big sales of U.S. crops to China due to the initial agreement. Total U.S. corn sales have struggled this year amid ample global supplies.

“Without some Chinese buying, not much has changed with overall exports sales lagging far behind year-ago levels,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.

The most active soybean futures contract on the Chicago Board of Trade set an 18-month high and ended up three cents at $9.55-1/2 a bushel (all figures US$). That put the benchmark up 6.8 per cent over the year.

The most active CBOT wheat contract rose 2-3/4 cents to $5.58-3/4 a bushel, below Monday’s 16-month peak of $5.64-1/2. The market ended up 11 per cent for 2019.

CBOT corn slipped 1/2 cent to $3.87-3/4 a bushel, leaving it up 3.4 per cent on the year.

U.S. farmers grappled with unfavourable crop weather this year, along with the U.S.-China trade war. Corn futures climbed to a five-year high after historic rains and flooding delayed spring plantings, before losing some ground due to tepid demand.

The planned U.S.-China deal has added to demand prospects for grains, which, along with global harvest concerns, have recently supported higher global cash prices for wheat.

“We’re going to have to see what the U.S.-Chinese deal means in reality and if we see shipments flowing between the two countries,” Arthur Portier of consultancy Agritel said.

Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Gus Trompiz in Paris and Emily Chow in Shanghai.

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