U.S. grains: Soybean futures rise as trade tensions ease

CBOT November 2019 soybeans with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. soybean futures rose on Monday as President Donald Trump predicted a trade deal with China, cooling fears about escalating tensions with the top importer of the oilseed.

Traders grew hopeful that the world’s two largest economies could move toward an agreement to end their trade war as Trump said he believed Beijing was sincere about wanting a deal.

China’s lead negotiator in the trade talks said Beijing was willing to resolve the dispute through “calm negotiations” and opposed the escalation of the conflict.

The trade war heated up on Friday as both sides levelled more tariffs on each other’s exports.

“Any kinds of talks between the United States and China should kick in a little bit of short covering,” said Craig Turner, commodities broker for Daniels Trading.

China imposed 25 per cent tariffs on a list of U.S. products including soybeans in July 2018 in response to duties Washington levied on Chinese goods, bringing U.S. soybean shipments to a virtual halt. Before the conflict, China bought U.S. soybeans worth $12 billion a year (all figures US$).

China’s soybean imports in July rose threefold from a year earlier, after the arrival of cargoes booked by Chinese state firms during a bilateral truce in December.

“The trade is believing that maybe we will get an agreement worked out,” said Brian Hoops, president of broker Midwest Market Solutions.

The most actively traded soybean futures contract on the Chicago Board Of Trade ended up 1.1 per cent at $8.67-1/4 a bushel. Earlier in the session, the contract hit $8.55 a bushel, matching a nearly three-week low set of Friday.

Most-active corn futures rose 0.1 per cent to $3.68-1/4 a bushel. The most-active wheat futures contract slipped 0.6 per cent to $4.75-1/4 a bushel. MGEX spring wheat futures set contract lows under pressure from the ongoing U.S. harvest and weak cash markets, brokers said.

Technical buying helped push corn futures higher, traders said. News that the U.S. and Japan agreed in principle to core elements of a trade deal also underpinned prices, they said.

“If we have an agreement with Japan, maybe China will be next,” Hoops said.

Uncertainty about the size of the upcoming U.S. corn and soybean harvests helped support markets, after advisory service Pro Farmer on Friday estimated crop yields would fall short of federal forecasts.

The U.S. Department of Agriculture on Monday increased its good-to-excellent rating for the corn crop by one percentage point to 57 per cent and its soybean rating by two points to 55 per cent.

— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Colin Packham in Sydney and Sybille de la Hamaide in Paris.

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