LONDON: Chicago soybean futures eased on Thursday, extending a retreat from the prior session's six-month high, as the market absorbed news of China's first major purchases of US supplies since a truce was struck in the Sino-US trade war.
The most-active soybean contract on the Chicago Board of Trade was down 0.2 percent at $9.18-1/4 a bushel at 1143 GMT. Prices rose to $9.28 on Wednesday, the highest since June 15.
China on Wednesday made its first major purchases of US soybeans since President Donald Trump and his Chinese counterpart Xi Jinping struck a trade war truce earlier this month, providing some relief to US farmers who have struggled to find buyers for their record-large harvest.
The purchase of over 1.5 million tonnes of beans is the most concrete evidence yet that China is making good on pledges the US government said Xi made when the two leaders met on Dec. 1 and agreed to a 90-day detente to negotiate a trade deal.
"The news has driven the US soybean price to its highest level since mid-June...This should not give rise to premature euphoria, however," Commerzbank said in a market note.
It added that this was because the purchases would hardly do anything to reduce gigantic stocks, which the USDA expects to more than double to 955 million bushels by the end of this season after several record crops in succession.
Wheat prices were higher with the most active CBOT contract up 0.9 percent at $5.31-1/4 a bushel, while March milling wheat on Paris-based Euronext rose 0.6 percent to 207.50 euros a tonne.
The wheat market is being underpinned by expectations of higher demand for US and French cargoes early next year when shipments from rivals Russia and Ukraine begin to slow.
Dealers said weekly US wheat export sales data, to be issued at 1330 GMT, would be closely watched although trade estimates of net sales of 500,000 to 800,000 tonnes for the 2018/19 season was broadly in line with the prior week's 711,779 tonnes.
European Union grain crops will jump in 2019 with soft wheat, the main crop cultivated in the bloc, hitting a four-year high due mainly to a sharp rise in projected yields after a severe drought this year, Strategie Grains said on Thursday.
CBOT's most active corn contract was up 0.1 percent at $3.85-3/4 a bushel.
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