SINGAPORE: Chicago soybeans jumped on Monday to their highest in almost six months, rising 1.9 percent after Washington and Beijing agreed a 90-day truce that will permit talks to end a festering trade war that has roiled commodities markets.
The White House said on Saturday that President Donald Trump told Chinese President Xi Jinping during talks in Argentina that he would not boost tariffs on $200 billion of Chinese goods to 25 percent on Jan. 1, as previously announced.
Beijing for its part agreed to buy an unspecified but "very substantial" amount of agricultural, energy, industrial and other products, the White House said in a statement.
"The initial agreement did include a specific promise for China to buy significant amounts of U.S. agricultural products which, if realised, will be very supportive for prices," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.
"However, there is a long way to go to for both U.S. and China before any real progress is made on the agreement and I think that all we have done for now is added more volatility to the market."
The Chicago Board of Trade most-active soybean contract was up 1.9 percent to $9.11-1/2 a bushel by 0637 GMT, after hitting its highest since mid-June at $9.24 a bushel.
Wheat gained 1.5 percent to $5.23-1/4 a bushel and corn advanced 1.2 percent to $3.82-1/4 a bushel. While corn hit its highest since early August, wheat touched its highest since late September.
Meanwhile China's soymeal futures lost 1.4 percent to 3,014 yuan ($436.93) a tonne.
While markets welcomed the U.S.-China trade truce news, some observers were cautious on how much had been achieved.
"A range of views on the trade talks have, and will, emerge over the next day or so," said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia. "A lot of that opinion is likely to assess the progress as being modest."
The trade war between the two countries has drastically curbed U.S. soybean exports to China, by far the world's biggest bean importer.
After imposing retaliatory tariffs on U.S. soybean imports, China has been taking mainly Brazilian beans, threatening to leave a bumper U.S. harvest piled up in storage or rotting in fields.
But gains in U.S. soybeans and other feed grains are likely to be limited amid slowing demand in China.
China's imports of soybeans are set to drop as an outbreak of African swine fever hits its huge pig herd and saps demand for the animal feed ingredient, making it easier for buyers to keep shunning U.S. cargoes amid the Sino-U.S. trade war.
The Commodity Futures Trading Commission's weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, trim their net .short position in soybeans in week to Nov. 27.
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