U.S. grains: Soy, corn sag on uncertainty over China trade talks

CBOT March 2019 soybeans, with 50-day moving average. (Barchart)

Chicago | Reuters — U.S. soybean and corn futures fell to session lows on Tuesday on reports that the Trump administration turned down Chinese offers this week for preparatory trade talks, brokers said.

The declines in corn and soybeans also pared advances in wheat futures, which nonetheless ended higher on signs of tightening Russian supplies.

Chicago Board of Trade March soybean futures settled down 7-1/2 cents at $9.09-1/4 a bushel after dipping to $8.99-1/2, breaking below chart support at the contract’s 50-day moving average near $9.06 (all figures US$).

CBOT March corn ended down 2-3/4 cents at $3.79 a bushel. March wheat finished up 3-1/2 cents at $5.21-1/4 a bushel, after reaching $5.26, a one-month high.

Soybeans and corn tumbled after the Financial Times reported that the Trump administration rejected an offer from China for preparatory trade talks this week ahead of high-level meetings next week.

Losses in U.S. equity markets deepened and the dollar weakened against the Japanese yen after the FT report, on concern the trade war between the world’s two biggest economies will continue and ultimately harm the global economy.

However, after the CBOT close, a top economic adviser to U.S. President Donald Trump said the story was not true.

CBOT soy futures showed little reaction to news that U.S. exporters last week loaded six soybean vessels bound for China, the most in any week since the start of the tariff war between Washington and Beijing.

The U.S. Department of Agriculture said 416,408 tonnes of soybeans were loaded onto two ships at U.S. Gulf Coast terminals and four vessels in the Pacific Northwest in the week ended Jan. 17, the most since eight vessels were loaded in the week ended March 8, 2018.

CBOT wheat ended higher, after briefly dipping lower following the slide in soybeans and corn.

“Wheat remains positive as Black Sea supplies tighten amid talk of managing shipments, and amid rumors of Chinese interest in three to seven million metric tonnes of U.S. wheat,” INTL FCStone chief commodities economist Arlan Suderman wrote in a client note.

Rumours of such large-scale purchases by China have swirled in markets in the past week, but official confirmation is unavailable because of the partial U.S. government shutdown, which has affected the USDA.

Several reports about possible Black Sea export curbs have appeared.

Stronger controls on grain exports are being considered by Russia’s state agriculture watchdog.

Ukraine’s agriculture ministry urged exporters to comply with export limitation memorandum terms as most of the agreed volume of wheat for the 2018-19 season has already been shipped.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting for Reuters by Michael Hogan in Hamburg, Naveen Thukral in Singapore and Mark Potter in London.

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