U.S. grains: Soybeans firm on trade deal hopes

CBOT May 2019 soybeans with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Chicago soybean futures climbed on Monday amid news reports that Beijing and Washington are close to settling a lingering trade dispute, a breakthrough that could boost China’s demand for U.S. soy and other agricultural products.

Corn also rose, pulling away from a three-month low struck in the previous session. Wheat prices eased back, but held above an 11-month low touched on Friday.

Grain markets have been pressured by ample global supplies, underscored by a slowdown in Chinese demand for U.S. supplies during the standoff on tariffs with Washington. But rising expectations of a trade deal have raised the prospect of a revival of purchases by China of U.S. agricultural goods.

Traders said the corn and soybean markets saw some technical buying on Monday, as flooding and ice buildup on key rivers in the U.S. Midwest has stalled the movement of barges that supply export terminals at the Gulf of Mexico with grain and soy.

Weather worries related to planting also gave corn a tiny boost, traders said.

“We’re hearing from people down in the Gulf Coast and in Texas, too, that the weather is causing some delays getting the initial corn plantings in,” said Jack Scoville, a futures market analyst at the Price Group. “It’s a small area for corn planting, for sure, but it’s bringing into view for the market that we could have trouble with plantings elsewhere this season.”

Trade deal weariness

The U.S. and China appear close to a deal to remove tariffs, a source briefed on negotiations said on Sunday, while the Wall Street Journal reported that U.S. President Donald Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit later this month.

Still, U.S. stock indexes turned lower and the dollar pared some gains on Monday, as investors appeared to need some convincing the U.S. and China would reach a trade agreement, while weaker-than-expected construction data did not help their mood.

Such a deal could be a boon for U.S. agricultural goods, which could soon be shipped into China without a duty for the first time since last summer. Although South American soybeans currently are priced cheaper than U.S. beans for April, traders said, other farm products — including meats, ethanol, corn, sorghum and DDGs — are expected to be appealing to Chinese buyers.

But traders cautioned that the market had grown weary of the uncertainty of such a deal — not only for the timing but details of when and how China’s market will be reopened to the U.S. market.

“Words and phrases like ‘optimism’ and ‘a deal is close,’ reigned this morning but the lack of concrete dates and details continue to overhang the trade,” Arlan Suderman, INTL FCStone chief commodities economist, said in a note to clients on Monday.

Most actively traded CBOT May soybeans settled up 4-1/2 cents at $9.16 per bushel on Monday (all figures US$). CBOT May corn futures rose for a second consecutive session, settling up 1-3/4 cents at $3.74-3/4 per bushel.

But CBOT wheat futures still could not get a break on Monday, posting a decline for the sixth consecutive session as technical selling and competitive global supplies pressured prices.

CBOT May soft red winter wheat ended the day down 1-3/4 cents to $4.55-1/2 a bushel. K.C. May hard red winter wheat also fell 1-3/4 cents, to end at $4.43 a bushel, while MGEX May spring wheat lost 6-1/4 cents at $5.52 a bushel.

Wheat lost seven per cent last week — its sharpest weekly fall in six months — as doubts that lower prices would boost export demand encouraged more selling by investment funds.

U.S. wheat was offered cheapest in a tender by Iraq that closed on Monday, according to traders.

It was not expected, however, to be the main origin chosen for a 625,000-tonne purchase announced by Saudi Arabia’s state buyer, with traders saying northern European origins were more likely to claim the bulk of the order.

Reporting for Reuters by P.J. Huffstutter in Chicago; additional reporting by Gus Trompiz in Paris and Colin Packham in Sydney.


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