Chicago | Reuters — U.S. grain and soybean futures eased on Wednesday as the markets paused after rallying this week on demand hopes fuelled by a U.S.-China trade agreement.
The long-awaited agreement included a Chinese commitment to expand purchases of U.S. farm products. However, traders are cautious about projections from Washington that deals will reach $40 billion to $50 billion within two years, compared with $24 billion before the trade dispute (all figures US$).
“The trade is becoming less convinced that China could double their buying from the U.S. in the next two years,” said Mike Zuzolo, president of Global Commodity Analytics.
Chinese importers bought at least two cargoes of U.S. soybeans after receiving another round of tariff-free quota for U.S. shipments on Tuesday, traders in both countries said.
But the sales may be China’s last large U.S. purchases before newly harvested soybeans from top supplier Brazil begin hitting the market next month, traders said.
The U.S. Department of Agriculture (USDA) did not report any new sales of soybeans, the most valuable U.S. crop export to China, in its daily export sales reporting system.
“Without further follow-through news to push us, you have a spot to consolidate and mill about here,” said Matt Wiegand, a commodity broker at FuturesOne.
The most actively traded wheat futures on the Chicago Board of Trade fell eight cents to $5.48-1/4 a bushel, after reaching a 5-1/2-month high at $5.57-1/4 on Tuesday.
CBOT soybeans dropped 1/4 cent to $9.28-1/2 a bushel, after touching a five-week high of $9.31 in the previous session. Corn edged down three cents to $3.87 a bushel, having struck a six-week top a day earlier at $3.90-1/2.
Profit-taking added pressure to the markets after the recent gains, traders said. Futures also ran into technical resistance on price charts following gains fuelled by investment fund flows, they said.
“Wheat saw some resistance levels after the recent price rally, and that brought in some liquidation and fund pressure,” Zuzolo said.
On Thursday, traders will digest weekly export sales data from USDA.
— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by PJ Huffstutter in Chicago, Gus Trompiz in Paris and Colin Packham in Sydney.