U.S. grains: Soy futures stabilize, eyeing China trade talks

CBOT July 2019 soybeans with Bollinger (20,2) bands, a gauge of market volatility. (Barchart)

Chicago | Reuters — U.S. soybean futures crept higher on Tuesday as traders breathed a sigh of relief over confirmation that a top Chinese negotiator will visit the United States for trade talks this week.

Corn and wheat futures also strengthened at the Chicago Board of Trade (CBOT).

Traders are monitoring any news on trade talks as a deal to resolve the trade war between Washington and Beijing could trigger accelerated commodities purchases by China, helping to reduce massive stockpiles of soybeans.

China’s commerce ministry said on Tuesday that Chinese Vice-Premier Liu He, who leads trade talks for Beijing, will visit the United States on Thursday and Friday.

The announcement gave some traders hope that negotiations could get back on track, after U.S. President Donald Trump said on Twitter on Sunday that he would raise tariffs on imports of Chinese goods this week.

Trump’s tweets fueled concerns that it would take Washington and Beijing longer than expected to resolve the trade war, pushing soy futures to new contract lows for the sixth consecutive session on Monday.

Soybeans were the single most valuable U.S. agricultural export crop and until the trade war China bought $12 billion-worth a year from U.S. farmers (all figures US$). The dispute, however, has slashed shipments of U.S. soy to China.

“We’re happy we now have confirmation there will be a meeting here Thursday and Friday,” said Rich Nelson, chief strategist at Illinois-based broker Allendale.

“We had our scare and at least right now we’re trying to stabilize.”

Short covering helped push soybean futures higher following recent losses, traders said.

Most active July soybeans ended up 0.1 per cent at $8.30-3/4 a bushel. Corn rose 0.8 per cent to $3.66-1/2 a bushel, while wheat advanced 0.8 per cent to $4.39-1/2 a bushel at the CBOT.

Corn futures got a boost from concerns that rain delaying the planting of the U.S. crop could hurt yields, traders said.

More rainfall is expected across the central Plains, Midwest and Delta regions this week, according to weather firm Maxar.

“The forecast for planting remains quite unfavourable,” Maxar said.

The U.S. Department of Agriculture on Monday said 23 per cent of the corn crop had been planted, below the five-year average of 46 per cent.

“Some 50 per cent of U.S. corn needs to be planted by mid-May, otherwise there could be a threat to yields,” said Matt Ammermann, commodity risk manager at INTL FCStone. “Mid-May is next week and we are still a long way from 50 per cent.”

Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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