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U.S. grains: Soybeans firm on hopes for thaw in U.S.-China trade tensions

Chicago | Reuters – U.S. soybean futures hit two-week peaks on Friday on signs of easing trade tensions between Washington and Beijing, but slipped from the highs after a White House official said he was less optimistic that a deal could be reached.

Corn futures also climbed, lifted by expectations for a cut to the U.S. Agriculture Department’s U.S. crop forecast in a monthly report next week, while wheat edged up in tandem with firming corn.

Soybeans posted their steepest gain in four months on Thursday after U.S. President Donald Trump and China’s Xi Jinping spoke on the phone about trade and agreed to meet this month at the G-20 meeting in Argentina. The rally contributed to the soy market’s strongest weekly advance since mid-August.

“Both presidents are putting out some optimistic vibes in terms of the potential for a trade deal,” said Terry Linn, analyst with Linn & Associates. “Both sides are talking and the meeting is set up in just under three weeks. Maybe something will happen.”

Soybean price moves were volatile amid conflicting reports that Trump had asked his cabinet to draw up a China trade plan. The market pared gains after White House economic adviser Larry Kudlow later told CNBC that Trump had not asked for a plan and said he was less optimistic than he previously was about reaching a deal with China.

After the close, Trump told reporters at the White House that a lot of progress had been made with China on trade and predicted the two countries would reach a good deal.

Chicago Board of Trade January soybeans ended up 5-3/4 cents at $8.87-3/4 a bushel after peaking at a high of $9.00-3/4. The contract was up 3.5 percent in the week.

December corn added 4-1/2 cents to $3.71-1/4 a bushel, ending the week up 1 percent, while CBOT December wheat rose 3/4 cent to $5.08-3/4 a bushel for a 0.7-percent weekly gain.

Positioning ahead of next Thursday’s monthly U.S. Department of Agriculture supply-and-demand report buoyed corn and soybeans amid expectations that the government would lower its yield estimates after poor Midwest harvest weather.

Analytics firm Informa Economics cut its outlook for both crops on Friday, trimming its corn yield forecast by 2.4 bushels per acre (bpa) to 179.7 bpa, according to trade sources that viewed the report. It also trimmed its soybean yield estimate to 52.6 bpa, down 0.4 bpa.

– Additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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