U.S. grains: Soybeans sag despite China trade deal signing

CBOT March 2020 soybeans with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. soybean futures fell to a one-month low on Wednesday even as U.S. President Donald Trump signed a “Phase One” trade deal with China, the world’s top soy importer, reflecting traders’ uncertainty about the terms of the pact.

Corn followed soybeans lower, but wheat futures surged to their highest in more than a year, buoyed by rising global cash prices and technical buying, analysts said.

Chicago Board of Trade soybeans for March delivery settled down 13-1/2 cents at $9.28-3/4 per bushel after dipping to $9.28-1/4, the contract’s lowest since Dec. 16, shortly after the U.S.-China trade pact was announced on Dec. 13 (all figures US$).

CBOT March corn ended down 1-1/2 cents at $3.87-1/2 a bushel while March wheat finished up 4-3/4 cents at $5.73-1/4, after reaching $5.78-3/4, the contract’s highest since November 2018.

Soybeans fell as traders remained skeptical about whether China would ramp up purchases of U.S. supplies in the face of strong competition from South America.

China committed to additional purchases of U.S. agriculture products by $32 billion over two years, the deal said, including $12.5 billion above the corresponding 2017 baseline of $24 billion in 2020 and $19.5 billion above the baseline in 2021.

But the agreement did not list specific volumes by commodity, and it said market conditions may dictate the timing of purchases.

“There are a lot of question marks here, and I don’t think the market likes the uncertainty,” said Joe Vaclavik, president of Standard Grain, a brokerage.

“I don’t know if the soybean market was ever convinced that we were going to see record purchases of soybeans. It never traded that way,” Vaclavik said.

CBOT soybeans faced additional pressure as soyoil futures fell two per cent, pressed by sliding Malaysian palm oil futures and larger-than-expected U.S. soyoil stocks.

The National Oilseed Processors Association (NOPA) reported U.S. soyoil stocks ballooned to 1.757 billion pounds by the end of December, up 21 per cent from the previous month and topping trade expectations.

On a bullish note, NOPA reported its members crushed 174.8 million bushels of soybeans in December, the second-most on record.

Wheat futures shrugged off the weakness in soybeans and rallied as signs of rising global cash prices attracted speculative buyers.

“Wheat has been an inertia market … and as we keep making new highs, I think some speculative buyers keep piling into new length,” said Dan Basse, president of AgResource Co. in Chicago.

“The hope is China will buy wheat, and I am sure they will. But trying to pick the day, the month, the class — it’s going to be interesting,” Basse said.

Egypt’s main state wheat buyer on Tuesday purchased 240,000 tonnes of Russian and Romanian wheat in an international tender, at prices that were up about $3 to $4 per tonne from a previous tender on Jan. 8.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Naveen Thukral and Sybille de La Hamaide.

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