U.S. grains: Soy climbs on fresh sales to China

CBOT March 2019 soybeans with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — The most-active U.S. soybean futures contract reached its highest level since June on Friday on news of fresh U.S. soy sales to China, but the market pared gains as traders considered plentiful global supplies.

Wheat futures rose as firming U.S. cash markets signaled a pick-up in export demand, and corn followed the firm trend.

Chicago Board of Trade March soybeans settled up 2-1/2 cents at $9.17-3/4 per bushel after reaching $9.31-1/4, the highest price for a most-active contract since June 14 on a continuous chart (all figures US$).

CBOT March wheat ended up 7-3/4 cents at $5.24-1/4 a bushel and March corn finished up 1-3/4 cents at $3.78-1/4 a bushel.

Soybeans advanced a day after Chinese VicePremier Liu He, following high-level, bilateral trade talks in Washington, announced China would buy an additional five million tonnes of U.S. soybeans.

Chinese state-owned firms bought at least one million tonnes of U.S. soybeans on Friday for shipment, three traders with knowledge of the deals said. One trader with direct knowledge of the deals said total purchases were around 2.2 million tonnes.

However, CBOT soybean futures pared gains and closed near the day’s lows.

“I think we understand that another five million tonnes… it doesn’t change the balance sheets tremendously,” said Dan Basse, president of AgResource Co.

“Because we’ve got a Brazilian harvest coming on, and we’ve got an abundance of U.S. and world stocks, the market can absorb five million tonnes and has done so,” Basse said.

Brokerage INTL FCStone lowered its estimate of Brazil’s soybean crop to 112.2 million tonnes, down four million tonnes from last month, citing hot and dry weather.

CBOT and K.C. wheat futures climbed on strengthening cash markets, especially for hard red winter wheat at the U.S. Texas Gulf export hub, which traders took as an indication of increased export demand.

“There is business getting done, and premiums are reflecting that,” one cash-connected U.S. wheat trader said.

K.C. March hard red winter wheat futures settled up 9-3/4 cents at $5.08-3/4 after trading below $5 in each of the last four sessions.

“It feels like below $5 in K.C. March there was a lot of interest. Wheat probably found some non-routine demand at that level,” said Joe Nussmeier, broker at Frontier Futures.

The news that China bought U.S. soybeans added to hopes that China might eventually buy U.S. wheat and corn as well.

“World wheat prices have been rising steadily, going back to September. We in Chicago have not followed because we didn’t get to see any of the volume. But maybe that is changing,” Basse said.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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