U.S. grains: Wheat, soy hit 2018 highs

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

Chicago | Reuters — U.S. grain and soybean futures hit 2018 highs to start the new year as traders continued to expect increased Chinese demand once Washington and Beijing ink an initial trade deal.

The gains on Thursday extended annual advances from 2019, a year marked by farmer stress over the U.S.-China trade war and unfavourable weather that delayed spring plantings and autumn harvesting.

U.S. President Donald Trump said on Tuesday that a Phase One trade deal with Beijing would be signed on Jan. 15. It includes a commitment by China to buy more U.S. agricultural products, although details have not been announced.

China slashed imports of U.S. farm goods after Beijing in 2018 imposed steep retaliatory tariffs on U.S. soybeans and other products as part of the countries’ bilateral trade war. The decline in shipments hurt U.S. crop prices that were already under pressure from large harvests.

“If you don’t see a consistent uptick in bushels moving, you’re going to have a hard time sustaining a lot of excitement,” said Matt Wiegand, broker for FuturesOne.

Most-active soybean futures ended up 3/4 cent at $9.56-1/4 a bushel at the Chicago Board of Trade (CBOT) after reaching a peak of $9.61 (all figures US$). That was the highest price for a most-active contract since June 12, 2018.

The most-active CBOT wheat contract rose 1-1/2 cents, or 0.1 per cent, to $5.60-1/4 a bushel. It hit the highest price for a most-active contract since Aug. 20, 2018.

CBOT corn strengthened 3-3/4 cents, or one per cent, to $3.91-1/2 a bushel.

Soybeans posted annual gains of 6.8 per cent in 2019, while wheat rose 11 per cent and corn firmed 3.4 per cent over the year at the CBOT. Soybean and wheat futures could see setbacks soon after the rallies, analysts said.

“You’ve got a little bit of money flow with the new year,” Wiegand said.

Traders are waiting for the U.S. Department of Agriculture to issue crop production data on Jan. 10 amid uncertainty about the size of the autumn corn harvest, which was delayed by cold, wet weather.

USDA said in a separate report that 5.24 million tons, or 175 million bushels, of U.S. soybeans were crushed in November. This was below analysts’ expectations for 5.277 million short tons, or 175.9 million bushels.

The agency on Friday is due to report weekly export sales of grains and soybeans, a day later than usual due to the New Year’s Day holiday on Wednesday.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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