Wheat gains on weak dollar, soybeans ease on US-China tensions

CHICAGO: Chicago soybeans softened on Friday as optimism over Chinese buying in the United States was tempered by political tensions between the two economic heavyweights.

Corn traded close to even, while wheat rose on hopes of new US export sales with the dollar remaining low.

The Chicago Board of Trade's most active soybean contract was down 2-1/2 at $8.97-1/2 a bushel by 11:05 a.m. (1605 GMT).

CBOT Corn was down 1/4 cent to $3.35-1/4 a bushel and wheat gained 8-3/4 cents to $5.38-3/4 a bushel.

Tensions remained high between the US and China, as China ordered shut the US consulate in Chengdu, retaliating against the closure of its Houston consulate.

"Watch what China does, not what they say," said Jason Ward, managing director at Northstar Commodity. "They're going to shut this embassy down in this southwest province, but they just keep buying beans."

Weekly US corn and soybean export sales reached multi-year highs in mid-July, propelled by big Chinese purchases.

US exporters sold 252,000 metric tonnes of soybeans, for delivery to unknown destinations, and 133,000 metric tons of soybean cake and meal for delivery to the Philippines during the 2019/2020 marketing year, USDA said on Friday.

Weather forecasts calling for rain across much of the US Midwest in the coming week pressured the corn market, though pockets of dryness have traders watching for reduced yields.

"It's getting a little more interesting in the state of Iowa," Ward said. "The last 30 days have been really dry."

The US Drought Monitor Thursday labelled much of western Iowa as facing moderate to severe drought conditions.

Wheat rallied as diminished global production forecasts, combined with the US dollar reaching lows not seen since Sept. 2018, made the US grain competitive on the world stage.

"There's rumors China's nosing around for US wheat again," said Charlie Sernatinger, Global Head of Grain Futures at ED&F MAN Capital Markets Ltd.