U.S. grains: Soybeans firm on new China sales, shrinking Brazil crop

CBOT March 2019 soybeans with 20- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. soybean futures edged higher on Monday on renewed Chinese demand for U.S. shipments and worries about a smaller Brazilian soy crop, but gains were limited by abundant global supplies and an uncertain outcome to Sino-U.S. trade talks.

The extended Chinese market closure for the Lunar New Year also kept prices in check. They touched a seven-month high in the previous session.

Corn and wheat followed soybeans higher as grain markets waited for the U.S. Department of Agriculture (USDA) to clear a backlog of crop reports delayed by a partial government shutdown.

USDA on Monday confirmed private sales of 612,000 tonnes of U.S. soybeans to China. The volume was lighter than expected after traders said on Friday that the world’s top soybean buyer had booked at least one million tonnes.

“The export sales to China announced this morning were a bit disappointing compared with expectations. But here’s a hope for continued sales to China and there are concerns about South American weather,” said Rich Nelson, chief strategist with Allendale Inc.

The Chinese state agricultural conglomerate COFCO Group said on Saturday that it recently purchased a batch of soybeans amounting to “millions of tonnes” from the United States.

The soybean purchases capped a round of high-level negotiations in Washington last week, held as part of a truce period agreed upon by the United States and China to try to resolve their tariff standoff.

Chicago Board of Trade March soybeans were up 3/4 cent at $9.18-1/2 a bushel, March corn was up one cent at $3.79-1/4 a bushel and CBOT March wheat was up 1-1/2 cents at $5.25-3/4 a bushel (all figures US$).

Crop forecasters have been cutting their Brazilian soybean harvest outlook for weeks as hot, dry weather in parts of the country hurt yield prospects. Still, the crop is expected to be among the largest ever produced by Brazil, the world’s top soy exporter.

Brokerage INTL FCStone lowered its estimate of Brazil’s soybean crop on Friday to 112.2 million tonnes, down four million tonnes from last month.

Traders are awaiting Friday’s supply and demand forecasts from USDA for any further revisions to U.S. soybean supply in view of the trade dispute.

— 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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