Chicago | Reuters — U.S. soybean futures slipped on Wednesday on diminishing hopes for a deal to ease the trade war with China that has slowed exports of U.S. agricultural products.
The market turned lower after a report that trade negotiations “hit a snag” over farm purchases.
U.S. President Donald Trump on Tuesday dangled the prospect of completing an initial trade deal with China “soon” but offered no new details on negotiations.
The lack of specifics about a date or place for signing the agreement unnerved some grain traders. They have been hoping for a deal that will increase U.S. soybean sales to China, the top importer of the oilseed, before rival shipper South America starts harvesting its next crop early next year.
“His comments yesterday are telling us, we’re not really that close to a deal,” said Brian Hoops, president of U.S.-based broker Midwest Market Solutions.
China imposed tariffs on imports of U.S. soybeans and other farm products last year as a result of the trade war and has turned to South America for soy instead. A delay in an initial trade deal between Washington and Beijing could prompt China to look to South America again in 2020, Hoops said.
“My fear is if we don’t reach an agreement in 60 days, there’s no incentive for China to make an agreement with us,” he said.
The most actively traded soybean contract slid 0.2 per cent to $9.15-1/4 a bushel at the Chicago Board of Trade (all figures US$). Corn dropped 0.5 per cent to $3.75-1/4 a bushel, while wheat fell 1.6 per cent to $5.09 a bushel at the CBOT.
Wheat futures pulled back from a rally on Tuesday as concerns eased about the risk of cold U.S. weather hurting recently seeded crops. Corn futures also declined in a turnaround from gains a day earlier.
“Much of yesterday’s gain was in sympathy with wheat, so it figures that a pullback in wheat would pressure corn,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
The U.S. Department of Agriculture said after the markets closed on Tuesday that the U.S. corn harvest was 66 per cent complete as of Sunday, behind expectations for 68 per cent and the five-year average of 85 per cent.
Cold, wet weather has slowed corn and soybean harvesting, although supplies are still expected to be sufficient.
“We can harvest it in the winter, we can harvest it in the spring, and we won’t run out any time soon,” Hoops said.
— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.