U.S. grains: Soy futures jump on hopes for China deals, positioning

Chicago | Reuters — U.S. soybean futures climbed on Friday to their highest prices in more than a week, on hopes China will make additional purchases of the oilseed in a thawing of the trade war between the world’s two biggest economies, traders said.

Corn and wheat futures also rose at the Chicago Board of Trade.

Short covering and technical buying helped lift prices after the grain and soy markets neared one-month lows this week, analysts said.

Soy traders are eager for Beijing to buy more U.S. cargoes after China purchased U.S. soybeans on Dec. 12 in the first significant deals in six months. The sales came after U.S. President Donald Trump and his Chinese counterpart Xi Jinping met on Dec. 1 and set a 90-day negotiating window to resolve their trade differences.

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China then made a second wave of purchases, the U.S. Department of Agriculture confirmed on Dec. 19, fueling expectations that more deals will be done.

“Everybody’s looking for them,” said Jack Scoville, vice-president of Price Futures Group in Chicago.

The most actively traded soybean contract jumped 1.5 per cent to $8.95-1/2 a bushel at the CBOT (all figures US$). Most-active corn rose 0.1 per cent to $3.75-1/2 a bushel, while CBOT wheat ended up 0.2 per cent at $5.11-1/2 a bushel.

Positioning helped propel prices higher after recent declines, traders said.

Optimism that Washington and Beijing will make progress to resolve the trade war also helped boost prices, they said. China is the world’s biggest soybean importer and all but halted purchases from the U.S. before the trade truce.

On Thursday, the Chinese commerce ministry said China and the U.S. had plans for more face-to-face consultations over trade in January.

China separately opened the door to imports of U.S. rice in what analysts took to signal an easing of tensions.

“I believe it’s happy feet over statements that came mostly out of China pointing to a thaw in the relations,” Scoville said about the soy rally.

The U.S. Department of Agriculture postponed indefinitely the release of its weekly export sales report, which was slated to come out on Friday, because of a partial U.S. government shutdown. USDA also has not published daily export sales announcements.

The information gap adds uncertainty and speculation to the marketplace about whether China is buying more soybeans, said Jason Britt, president of Missouri-based broker Central States Commodities.

“It’s like, ‘Maybe they are in here,'” Britt said.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Emily Chow in Kuala Lumpur and Sybille de La Hamaide in Paris.

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