U.S. grains: Soybeans extend gains on big Chinese purchase

Chicago | Reuters –– U.S. soybean futures hit a six-week high on Friday as China’s first large purchase of U.S. beans in months and easing of some duties on U.S. exports fuelled hopes of a detente in the tariff war between Washington and Beijing.

Corn also firmed as signs of a U.S.-China trade thaw sparked short covering, while wheat futures ended flat.

All three markets posted their strongest weekly gains since mid-summer.

A report on Friday that China will exempt some agricultural products, including soybeans and pork, from additional tariffs added to optimism about easing trade tensions after Thursday’s news that Chinese firms had booked at least 10 vessels of U.S. soybeans ahead of high-level talks next month.

The U.S. Department of Agriculture on Friday confirmed a portion of those sales, reporting that Chinese importers booked 204,000 tonnes for 2019-20 marketing year shipment.

The year-long tariff battle has stalled massive U.S. soybean exports to top importer China, swelling U.S. stocks.

U.S. President Donald Trump said on Thursday he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact.

“There seems to be a willingness to ratchet down the rhetoric ahead of these meetings versus ratcheting it up. At this point it’s a positive sign,” said Jerry Gidel, grain strategist with Price Futures Group.

Chicago Board of Trade November soybeans rose 3-1/4 cents to $8.98-3/4 a bushel (all figures US$). Its 4.8 per cent weekly gain was the steepest in 3-1/2 months.

December corn rose 1-1/2 cents to $3.68-3/4 a bushel, gaining 3.7 per cent in the week.

CBOT December wheat dipped 1/4 cent to $4.82-3/4, but ended the week up 4.3 per cent.

The trade news largely overshadowed fresh crop forecasts from USDA on Thursday, which projected corn and soybean harvests in the U.S. above trade expectations.

The agency lowered its U.S. 2019-20 corn yield estimate to 168.2 bushels per acre, down from 169.5 in August but above the average estimate of 167.2 bu./ac.

Its U.S. soybean yield outlook was trimmed to 47.9 bu./ac., down from 48.5 in August, but above the average estimate of 47.2.

Favourable U.S. Midwest crop weather this week lessened concerns about a sharp drop in production, although some traders expect further reductions in USDA’s forecasts.

Grain markets have been struggling to assess U.S. harvest prospects after exceptionally late planting during a rain-plagued spring followed by signs of good yield potential in some zones as weather conditions improved.

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