U.S. grains: Soybeans up as China talks fuel export hopes

CBOT March 2019 soybeans with 50-day moving average. (Barchart)

Chicago | Reuters — U.S. soybean futures climbed to a two-week high on Friday on optimism over U.S.-China trade talks planned for next week, coupled with declining estimates of the size of Brazil’s developing crop, traders said.

Corn and wheat followed the firm trend, with brightening export prospects for both grains lending support.

Chicago Board of Trade March soybeans settled up 8-3/4 cents at $9.21-1/2 a bushel after reaching $9.22-1/2, the contract’s highest since Dec. 19 (all figures US$).

CBOT March corn ended up 3-1/4 cents at $3.83 a bushel and March wheat rose 3-1/4 cents at $5.17 a bushel.

Soybeans, corn and wheat each recorded a third consecutive higher close. Soybeans were buoyed by news that the U.S. and top global soy buyer China will hold trade talks next week.

Stock and commodity markets rallied after Beijing announced a new round of negotiations with Washington on Jan. 7-8, bolstering hopes of a resolution to a tariff war that has clouded the global economic outlook.

“Fund managers are buying commodities on the possibility (of increased commodity sales to China), along with hopes that a trade deal would be good for the U.S. and global economy,” INTL FCStone chief commodities economist Arlan Suderman said in a client note.

As the most valuable U.S. agricultural export to China, soybeans have been most sensitive to developments in the trade dispute. But traders also see scope for improved relations to trigger Chinese imports of U.S. cereals like corn and wheat.

Worries about declining South American crop prospects added support to soy futures. INTL FCStone cut its estimate of Brazil’s soybean crop by about four million tonnes to 116.25 million tonnes due to a drought affecting some areas.

Wheat futures rose on news that Algeria, a major wheat importer, rejected a wheat shipment from Argentina that was below contractual quality standards.

“More of us are thinking (that) there are quality issues with the Argentinian crop,” said Dan Basse, president of Chicago-based AgResource Co.

Support also stemmed from projections for a drop in U.S. winter wheat plantings compared to a year ago.

Private analytics firm IEG Vantage, formerly known as Informa Economics IEG, estimated U.S. winter wheat seedings for the 2019 harvest at 31.513 million acres, down from the 32.535 million acres the U.S. Department of Agriculture said farmers planted a year earlier.

The firm’s winter wheat seedings figure includes 22.207 million acres of hard red winter wheat, 5.850 million acres of soft red winter wheat and 3.456 million acres of white winter wheat.

USDA on Friday delayed its U.S. winter wheat seedings report along with several other reports because of the two-week-old partial government shutdown.

New release dates for the data, originally scheduled for Friday, Jan. 11, will be set once government funding is restored, USDA said.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Emily Chow in Kuala Lumpur.

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