Soybeans rise on US-China trade hopes but set for annual drop

PARIS/KUALA LUMPUR: Chicago soybean futures edged up on Monday as investors saw signs of thawing relations between Washington and Beijing in the trade dispute that has disrupted flows of the most valuable US agricultural export to China.

Soybeans were poised to end 2018 with an annual decline after the plunge in exports to China coupled with big harvests in the United States and Brazil weighed on prices.

A resumption in Chinese imports of US soybeans this month as part of a negotiated truce between the world's two largest economies has helped Chicago prices rebound from a decade low in September.

Wheat, in contrast, is set to notch up its biggest annual rise since 2012 after a sharp fall in production in major exporters Russia, the European Union and Australia, making it one of the biggest gainers in commodity markets this year.

Corn has also risen this year as tightening wheat supply fuelled additional demand from livestock feed makers, offsetting concerns about disruption to US shipments to China.

In quiet trading ahead of Tuesday's New Year holiday closure, the most-active soybean contract on the Chicago Board Of Trade rose 0.6 percent to $9.00-3/4 a bushel by 1111 GMT.

For the year, soybeans are set to drop 6.3 percent, marking a second straight annual decline. The price benchmark hit its lowest in almost 10 years in September at $8.12-1/4.

Prices on Monday were supported by what US President Donald Trump described as a "very good call" with China's President Xi Jinping.

"Soybeans are in the frontline in the trade war, so they're getting a lift today," one European trader said.

Washington and Beijing already plan trade consultations in January, and China has also opened the door to rice imports from the United States for the first time ever.

Tit-for-tat tariffs in the US-China trade dispute choked exports of US soybeans before a series of purchases this month following a Dec. 1 truce agreed by Trump and Xi.

However, traders remain cautious about the scale of Chinese buying and a partial shutdown of the US government has added to uncertainty by leading to the postponement of daily and weekly export sales reports from the US Department of Agriculture.

CBOT corn was little changed on Monday, keeping it on course to climb 7.1 percent over the year.

Wheat edged lower but was up 18.9 percent in 2018.

Traders expect export demand for US wheat to accelerate in the coming months as supply tightens in top supplier Russia, although the absence of export restrictions by the Russian authorities have capped prices in recent months.