U.S. grains: Soybeans set highest price since June 2018

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

Chicago | Reuters — U.S. soybean futures on Monday rose to their highest price since June 2018 on expectations that Washington and Beijing will soon sign an initial trade deal that will increase American agricultural exports.

China agreed to import more U.S. farm goods under the Phase 1 deal struck this month, providing support for farm markets. Chinese Vice-Premier Liu He will visit Washington this week to sign the agreement, the South China Morning Post reported.

China separately approved two new genetically modified crops for import that could boost agricultural purchases from the United States, the agriculture ministry said.

Traders and farmers hope increased Chinese demand will reduce inventories of U.S. crops that built up during the trade war. China, the world’s biggest soybean importer, shifted purchases to South America from the U.S. because of the dispute. Details have not been announced about what farm goods China will buy under the trade deal or when the purchases will occur.

“The big story of the day was the report that China has accepted an invitation to the U.S. to sign the Phase 1 trade deal,” said Karl Setzer, commodity risk analyst for AgriVisor.

Most-active soybeans futures on the Chicago Board of Trade rose 11 cents to $9.52-1/2 a bushel (all figures US$). They reached the highest price for a most-active contract since June 13, 2018.

A rally near three-year highs in Malaysian palm oil futures lent support to wider oilseed markets, including soybeans. Volumes were light at the CBOT, and traders were adjusting positions before the end of the year.

Corn slipped 1-3/4 cents to $3.88-1/4 a bushel after touching its highest price since Oct. 22, 2019.

Wheat futures pulled back after the most-active contract reached its highest price since August 2018 at the CBOT. The contract ended down 1/4 cent at $5.56.

The market advanced recently on hopes for increased Chinese buying and concerns about unfavourable crop weather reducing harvests in rival wheat exporters such as Russia, Ukraine and Australia. Export prices in Russia, the world’s biggest wheat supplier, rose for a seventh straight week last week.

However, prices were looking too high to some analysts.

“We think wheat is getting overdone,” said Craig Turner, senior commodities broker for Daniels Trading in Chicago.

Weekend rains in crop-growing areas of the U.S. Plains helped weigh on wheat futures, traders said. Rain and snow “provided local relief in areas experiencing drought,” according to a daily U.S. Department of Agriculture weather report.

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

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