U.S. grains: Soybeans strike post-harvest highs on trade truce

CBOT January 2019 soybeans, with 20-day moving average. (Barchart)

Chicago | Reuters — U.S. soybean futures rallied to their highest since at least August on Monday, joining a broad rally in commodity and equity prices after Washington and Beijing sealed a truce in a trade war that has halted nearly all U.S. soy shipments to the world’s top importer.

Soybean prices, however, set back from early highs due to uncertainty about the size of any new Chinese purchases of U.S. beans ahead of what is expected to be a record-large Brazilian harvest in the coming months.

U.S. Agriculture Secretary Sonny Perdue said Monday that China would likely return to the U.S. soybean market around Jan. 1 due to a shortage of supplies in South America. But it is “yet to be determined” if Beijing would remove tariffs on U.S. soybeans.

At a gathering of G20 countries in Argentina on Saturday, U.S. President Donald Trump agreed to hold off on new tariffs during a 90-day truce period, while Chinese counterpart Xi Jinping pledged to purchase more agricultural products from U.S. farmers immediately, the White House said.

“The market believes that there has been a substantial change in the narrative,” said Rich Nelson, chief strategist with Allendale Inc. “But lots of questions remain: the amount they may be buying and it may be limited to just the Chinese government.”

Chinese soybean traders say Beijing will need to drop its 25 per cent tariff on U.S. shipments before a promise to buy a “very substantial” amount of U.S. soybeans can be fulfilled. U.S. soybeans remain at a premium to Brazilian shipments, which are not subject to the tariff.

Chicago Board of Trade January soybeans ended just 11 cents higher at $9.05-3/4 a bushel after earlier peaking at $9.23-3/4 (all figures US$). That was the contract’s loftiest level since Aug. 9 and the highest for a most-active soybean contract since mid-June.

Corn and wheat rose on spillover support.

CBOT March corn was up 4-1/4 cents at $3.82 a bushel after earlier reaching a high of $3.85-1/4, the loftiest for a most-active contract in nearly four months. CBOT March wheat gained 5-1/2 cents to $5.21-1/4 a bushel.

Corn futures drew additional support from concerns that rising soybean prices could trigger a shift in spring planting of the oilseed at the expense of corn acreage.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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