U.S. grains: Corn, wheat, soy rally on China trade hopes

Chicago | Reuters — U.S. corn, wheat and soybean futures rose on Thursday on fresh export demand and renewed hopes for a trade agreement with China after U.S. President Donald Trump tweeted that a deal with Beijing was “very close,” analysts said.

Chicago Board of Trade March corn futures settled up 6-1/2 cents at $3.77-3/4 per bushel, their biggest single-day advance in nearly two weeks (all figures US$).

CBOT March wheat ended up 11 cents at $5.30-1/4 a bushel and January soybeans rose 4-3/4 cents to settle at $8.98-1/4 a bushel.

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All three markets advanced after Trump said the United States was “very close” to nailing down a trade deal with China, and the Wall Street Journal reported that U.S. negotiators had offered to suspend tariffs due to go into effect on Dec. 15. The White House had no comment on the report.

China is the world’s largest soybean importer and a major buyer of U.S. sorghum, pork and other agricultural products.

After the CBOT close, Bloomberg TV and Reuters reported that the United States had reached a deal in principle with China.

Additional support stemmed from news that the U.S. Department of Agriculture confirmed private sales of 1.6 million tonnes of corn to Mexico, the fifth-biggest one-day U.S. corn sale on record.

“As of the beginning of December, export commitments to everybody else but Mexico were record low,” said Bill Tierney, analyst with AgResource Co. in Chicago, citing cheaper supplies from South American suppliers.

“So luckily for us, the only market we are competitive in, price-wise, happened to be a huge market for corn,” Tierney said of Mexico.

The sale to Mexico, announced through the USDA’s daily reporting system, came after the agency reported stronger-than-expected weekly corn export sales totaling 876,000 tonnes. Weekly sales of U.S. wheat and soybeans also topped trade expectations.

In addition, with the U.S. harvest virtually wrapped up, CBOT futures were due for a rebound, Tierney said.

“We are near the seasonal lows, and here is this possibility that we could get a trade agreement which could stimulate exports to China. I would rather buy the market at this level than sell it,” Tierney said.

Wheat futures drew support from a forecast from consultancy Strategie Grains that soft wheat production in the European Union would fall 3.6 per cent in 2020 to 140.5 million tonnes, reflecting a decline in seedings.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Naveen Thukral and Sybille de La Hamaide.

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