U.S. grains: Soybeans rise ahead of G20 talks, wheat declines

CBOT December 2018 wheat, with 20-day moving average. (Barchart)

Chicago | Reuters — U.S. soybean futures firmed on Tuesday as brokers adjusted positions ahead of trade talks between China and the U.S. at the upcoming G20 meeting.

Corn ended narrowly mixed while wheat futures fell on technical selling and worries about export demand for U.S. supplies. In addition, concerns eased about political tension between Russia and Ukraine potentially disrupting grain shipments.

Chicago Board of Trade soybean futures settled up 13-1/4 cents at $8.75-1/2 per bushel and December corn ended up 1/2 cent at $3.56-1/2 a bushel (all figures US$).

CBOT December wheat finished down 9-1/2 cents at $4.98 a bushel.

Soybean futures recouped much of Monday’s two per cent sell-off, and the January contract climbed back above its 50-day moving average.

The focus was on the G20 summit meeting in Argentina later this week, where U.S. President Donald Trump is expected to meet with China’s Xi Jinping for the first time since the world’s two largest economies imposed tariffs on each other’s imports.

“We have not done anything in beans except bounce around. All the grains, really, are waiting to see what happens over the weekend. Will they make some progress, or will the stalemate continue? That’s going to determine the direction,” said Terry Linn, analyst with Linn + Associates in Chicago.

“U.S. soybean exports to China have been all but stopped because of the trade war,” said Charles Clack, agricultural commodity analyst at Rabobank.

Trump is prepared to hike tariffs on Chinese imports if there is no breakthrough, White House economic adviser Larry Kudlow said.

Wheat futures fell on technical selling and worries about U.S. export prospects as the dollar index hit a two-week high, making U.S. grains less competitive globally. The dollar firmed after Federal Reserve vice-chair Richard Clarida backed further interest rate hikes.

Also bearish, SovEcon, a Russian agricultural consultancy, raised its forecast of Russia’s 2018-19 wheat exports to 34.7 million tonnes, from 34.2 million previously. Russia is the world’s top wheat exporter.

Long liquidation may have added pressure ahead of first notice day for deliveries against CBOT December futures, which is Friday.

Traders have been monitoring political tension in the Black Sea region that could raise prices for Ukrainian grain, making U.S. supplies more competitive. However, Ukrainian exports were moving normally, Ukraine’s agriculture ministry said in a statement.

Russia seized three Ukrainian naval ships and took their crew prisoner over the weekend, prompting Ukraine’s President Petro Poroshenko to say there was now an “extremely serious” threat of a Russian land invasion.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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