U.S. grains: Soybeans end firm as hopes build for China talks

Chicago | Reuters — U.S. soybean futures firmed on Thursday, supported by renewed optimism that the U.S. and China, the world’s largest soybean buyer, will resume trade talks.

Chicago Board of Trade January soybeans settled up 5-1/4 cents at $8.88-3/4 per bushel after reaching $8.97-1/2, the contract’s highest since Nov. 2 (all figures US$).

CBOT December wheat ended up 2-1/2 cents at $5.05-1/2 a bushel but stayed inside Wednesday’s range. December corn rose 1/2 cent at $3.67-1/2.

U.S. soybean exports to top buyer China have declined in recent months after Beijing raised tariffs on the most valuable U.S. agricultural export to the country as part of the ongoing trade war between the world’s biggest economies.

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An expected meeting between U.S. President Donald Trump and Chinese President Xi Jinping on the sidelines of a G20 summit in Argentina in two weeks has raised hopes of a thawing in relations.

Optimism was further encouraged by news on Thursday that China has delivered a written response to U.S. demands for wide-ranging trade reforms.

However, CBOT soybean futures pared gains as traders fixated on forecasts for U.S. soybean inventories to approach one billion bushels by the end of the 2018-19 marketing year, even if Washington and Beijing make progress with trade talks. The U.S. Department of Agriculture this month raised its forecast of U.S. soy ending stocks to 955 million bushels.

“With a (nearly) one billion-bushel carry-out, that’s going to be a heavy weight over the market,” said Jason Clapp, a broker-analyst with Indiana-based Risk Management Commodities.

The National Oilseed Processors Association (NOPA) said its members crushed a record 172.346 million bushels of soybeans in October, topping an average of trade expectations for 170 million.

But traders shrugged off the better-than-expected crushing pace and soybean futures pared gains as the NOPA data was released, while CBOT soymeal turned lower.

“We’ve got plenty of everything, as far as soybeans go. And that is going to weigh on us,” Clapp said.

Some analysts doubt the United States will be able to meet USDA’s forecast for 2018-19 soybean exports to reach 1.9 billion bushels.

“The larger issue is … China seems to be learning how to get along without U.S. soybeans,” said Rich Feltes, vice-president for research with R.J. O’Brien.

CBOT wheat futures closed higher on technical buying and hopes of a pick-up in U.S. export demand. The global grain market needs more U.S. wheat to make up for tightening supply in other leading exporting zones, trading firms told an industry conference on Wednesday.

Corn futures closed fractionally higher but pared advances into the close.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Manolo Serapio Jr. in Manila.

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