Soybeans hit 3-week high on China sales hopes; wheat declines

CHICAGO: US soybean futures hit a three-week high on Tuesday on confirmation of U.S. soy sales to top global importer China and signs of an improving export outlook, traders said.

Wheat futures fell as the U.S. winter wheat harvest got rolling while corn ended modestly higher.

Chicago Board of Trade July soybeans settled up 10 cents at $8.50-1/2 per bushel after reaching $8.56, the contract's highest since May 12.

CBOT July wheat ended down 7-1/4 cents at $5.08 a bushel and July corn finished up 1 cent at $3.24-1/4 a bushel.

Soybean futures firmed on export optimism after the U.S. Department of Agriculture confirmed sales of 132,000 tonnes of U.S. soybeans to China, even though China has told state-owned firms to halt U.S. soy purchases due to a dispute with the United States over China's actions in Hong Kong.

Commerzbank said: "It cannot yet be ruled out that the actions by the Chinese are not much more than sabre-rattling."

Others noted that U.S. soybeans have become cheaper than supplies from Brazil, the world's No. 1 supplier.

"We got confirmation of (soy export) business, and we do have indications there is more demand around," said Terry Linn, analyst with Linn & Associates in Chicago. Currency moves have played a role, with the U.S. dollar sliding since mid-May, while Brazil's real has firmed.

"We are competitive ... So we should see more business pick up here, and not just to China," Linn said.

Wheat futures declined as traders shifted their focus to the start of the U.S. harvest, which was 3% complete by Sunday, just ahead of the 2% five-year average.

Wheat weakened on favorable U.S. weather as the harvest starts and recent rain in the Black Sea and Europe, which has helped stabilize crops, said Matt Ammermann, commodity risk manager with INTL FCStone.

Corn futures edged higher. Commodity funds hold a large net short position in CBOT corn futures, leaving the market vulnerable to bouts of short-covering.

U.S. crop weather was generally favorable for corn and soy. The USDA said planting progress reached 93% for corn and 75% for soybeans, both ahead of their respective five-year averages.