Renewed optimism about US China trade talks lifts grains

CHICAGO: US soybean futures jumped 1 percent on Friday while corn and wheat also edged upward in a broad commodities and equities market rally on renewed optimism about US-China trade talks.

Media reports highlighting potential progress in trade negotiations between Washington and China lifted grains for a third straight session and put corn, soybeans and wheat on track for modest weekly gains.

Rumors of large scale US grain purchases by China have riled markets this week, but official confirmation of such deals has not been available due to the partial US government shutdown that has shuttered numerous divisions of the US Department of Agriculture.

"The commodity markets are starting to gear up for the idea that China's going to open up," said Mike Zuzolo, president of Global Commodity Analytics. "The trade is really gearing up for the idea that these rumours are going to materialize."

Chicago Board of Trade (CBOT) March soybeans were up 10-1/4 cents at $9.18 a bushel at 10:48 a.m. CST (1648 GMT), March corn gained 1-3/4 cents to $3.81-3/4 a bushel and CBOT wheat rose 1/4 cent to $5.18 a bushel.

All three commodities held chart support at their 50-day moving averages and, after a week of price moves fueled by technical trading, were on pace for weekly gains.

Bloomberg reported on Friday that China offered to go on a six-year buying spree to ramp up imports from the United States in an effort to cut its trade imbalance.

The report came a day after the Wall Street Journal said US Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30. A Treasury spokesman working with the administration's trade team denied the report.

Gains in grains have been modest, however, as traders remained cautious in the absence of confirmed Chinese purchases and signs that the negotiating parties are following through on their trade proposals.

Soybean and corn markets weighed harvest prospects in South America, where adverse weather has dented yield prospects.

Wheat traders eyed a threatening winter storm traversing the central United States on Friday and forecasts for harsh cold in the system's wake.

Heavy snowfall expected from the storm should help insulate dormant winter wheat from the cold air. But the snow is likely to miss portions of the Plains and Midwest, leaving some areas vulnerable to crop-damaging weather.