U.S. grains: Soy climbs as U.S., China plan to restart trade talks

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures climbed to one-week highs on Thursday as plans for Beijing and Washington to hold fresh trade talks raised hopes for U.S. soy sales to China after being stalled by a tariff dispute.

The rally in soybeans also helped wheat and corn futures rise, traders said, after China’s Ministry of Commerce said a delegation will travel to the U.S. for bilateral trade talks this month.

China is the world’s top importer of soy and last year bought shipments from the United States worth some $12 billion, making the oilseed America’s top farm export to China (all figures US$).

The trade standoff, however, has prompted Beijing to impose extra tariffs on imports of U.S. soybeans and shift its purchases to Brazil.

“The feuding parties are at least talking,” said Rich Feltes, grain analyst for U.S. broker RJ O’Brien. “The first step in ending any conflict is to start talking.”

Most-active soybean futures soared 3.2 per cent to $8.97 a bushel at the Chicago Board of Trade (CBOT), more than retracing Wednesday’s 1.2 per cent drop. The nearby contract reached its highest price since Aug. 9.

The market recovered after dropping to a three-week low on Monday on fears that U.S. soy inventories would pile up because of a record-large harvest and the trade row.

Traders bought back their previously sold, or short, positions because of the impending trade talks, said Brian Hoops, president of U.S. broker Midwest Market Solutions.

“There’s enough reason out there to be nervous if you’re a weak-handed short,” he said. “If we reach an agreement, we’re likely to trade sharply higher.”

Dwindling soy supplies in Brazil and the arrival of U.S. cargoes at China’s Dalian port have suggested China will need to resume imports from the U.S. to cover its needs, according to some traders.

A second vessel carrying U.S. soybeans has entered China’s Dalian port, Thomson Reuters data showed, following the unloading of U.S. beans from another ship this week.

“They’re going to have to buy from somebody and it’s probably going to be us,” Hoops referring to China.

In other export news, the U.S. Department of Agriculture said private exporters struck deals to sell 154,404 tonnes of U.S. soy to Mexico and 200,000 tonnes of U.S. hard red winter wheat to Iraq.

Most-active CBOT wheat jumped 1.9 per cent to $5.62 a bushel and corn advanced 1.1 per cent to $3.79-3/4 a bushel.

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

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