U.S. grains: Soy futures up on hopes of progress in U.S.-China dispute

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

Chicago | Reuters –– U.S. soybean futures turned higher on Wednesday on optimism that Washington and Beijing will make progress at the upcoming G20 leaders summit toward resolving the trade dispute that has disrupted U.S. exports of the oilseed.

Wheat futures slipped, while corn futures ended nearly unchanged after touching their lowest price since Oct. 1.

Traders hope U.S. President Donald Trump and Chinese President Xi Jinping will advance a trade deal at an expected meeting on the sidelines of the summit in Buenos Aires that will take place from Nov. 30 to Dec. 1.

China is the world’s largest soybean importer, and the oilseed is the United States’ single-largest agricultural export to the Asian country. However, retaliatory Chinese tariffs against U.S. soybeans have stalled trade, threatening to leave a bumper U.S. harvest piled up in storage or even rotting in fields.

“Right now it’s all about Chinese demand and how things play out in Argentina,” Kevin Van Trump, president of U.S. consultancy Farm Direction, said in a note. “In my opinion there’s no need to even talk about anything else!”

China has bought soybeans from South America during its dispute with Washington.

Delays in resolving the dispute would cause further pain for the U.S. farm sector because Brazil will harvest its next soybean crop early next year, said Brian Hoops, president of U.S.-based brokerage Midwest Market Solutions. That means China will not need to return to the U.S. for supplies anytime soon, he said.

“If we don’t reach an agreement at this time frame, we may not get one done,” Hoops said.

The most active soybean contract ended up two cents at $8.83 a bushel on the Chicago Board of Trade (all figures US$). Corn gained 1/2 cent to close at $3.61-3/4 a bushel and wheat slipped 1-3/4 cents to $5.06-3/4 a bushel.

Limited global demand for U.S. wheat pressured prices amid competition for export business from top supplier Russia.

“We’re still trying to find a price level that gives us demand,” Hoops said. “We haven’t found it yet.”

Paris wheat futures hit a two-month low on Monday on growing doubts about the extent to which Western Europe would profit from reduced wheat supplies in Russia. Prices edged higher on Wednesday on technical buying.

CBOT trading was subdued as investors looked ahead to Thursday’s Thanksgiving Day holiday, when the U.S. markets will be closed. Markets will resume trading for a shortened U.S. session on Friday.

— Tom Polansek reports on agriculture and commodity markets for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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