U.S. grains: Renewed optimism for China trade talks lifts grains

CBOT March 2019 soybeans with 20-day moving average. (Barchart)

Chicago | Reuters — U.S. corn and soybean futures rose for a third straight session on Friday in a broad commodities and equities market rally sparked by renewed optimism about U.S.-China trade talks.

Wheat edged upward along with corn and soy, but shed gains late in the day as traders pocketed profits fueled by media reports highlighting potential progress in U.S.-China trade negotiations.

Rumours of large-scale U.S. grain purchases by China riled markets this week, but official confirmation of such deals has not been available due to the partial U.S. government shutdown that has shuttered numerous divisions of the U.S. Department of Agriculture.

“The commodity markets are starting to gear up for the idea that China’s going to open up,” said Mike Zuzolo, president of Global Commodity Analytics. “The trade is really gearing up for the idea that these rumours are going to materialize.”

Chicago Board of Trade (CBOT) March soybeans ended up nine cents at $9.16-3/4 a bushel, March corn gained 1-3/4 cents to $3.81-3/4 a bushel and CBOT March wheat ended unchanged at $5.17-3/4 a bushel (all figures US$).

Corn and soybeans both made advances for the second week in six, rising 0.9 and 0.7 per cent respectively. Wheat shed 0.3 per cent, the first weekly drop in three weeks.

Bloomberg reported on Friday that China offered to go on a six-year buying spree to ramp up imports from the U.S. in an effort to cut its trade imbalance.

The report came a day after the Wall Street Journal said U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30. A Treasury spokesman working with the administration’s trade team denied the report.

Gains in grains have been modest, however, as traders remained cautious in the absence of confirmed Chinese purchases and signs that the negotiating parties are following through on their trade proposals.

Soybean and corn markets weighed harvest prospects in South America, where adverse weather has dented yield prospects.

Wheat traders eyed a threatening winter storm traversing the central U.S. on Friday and forecasts for harsh cold in the system’s wake.

Heavy snowfall expected from the storm should help insulate dormant winter wheat from the cold air. But the snow is likely to miss portions of the Plains and Midwest, leaving some areas vulnerable to crop-damaging weather.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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