Soy, corn firm on trade deal hopes; wheat rebounds as USDA trims US supplies

• Hopes for China interim deal underpin soybeans
• USMCA agreement seen positive for grains, soy
• Wheat up as USDA trims US supply outlook, lifts exports

CHICAGO: US soybean futures firmed on Tuesday, rising for a sixth consecutive session on hopes that the United States and China will continue to progress toward an interim trade deal.

Corn futures also edged higher on an improved trade outlook as Canada, Mexico and the United States approved changes to a preliminary trade deal struck last year to replace their existing regional trade pact.

Both markets largely shrugged off a monthly US Department of Agriculture (USDA) supply-and-demand report, released at midsession, as the closely followed release made few changes to either crop's balance sheet.

Wheat, however, reversed earlier losses after the USDA forecast a drop in domestic wheat supplies to a five-year low.

Markets drew some underlying support from news that officials from the United States, Mexico and Canada will sign the US-Mexico-Canada Trade Agreement (USMCA) on Tuesday, although the renegotiated deal was not seen as having a major impact on regional trade of grain and soy.

Grain traders remained largely focused on negotiations between Washington and Beijing ahead of Dec. 15, when US President Donald Trump has said he would raise import tariffs on more Chinese goods, potentially escalating tensions in the 17 month-long trade war between the two countries.

"We're waiting to see if the China deal will get passed. The USMCA getting passed is better than not getting passed, but I don't know that it will have any immediate effect," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.

Trump has said he wants "movement" from China to avoid the tariff increase, although the Wall Street Journal reported on Tuesday that trade negotiators are planning for a delay of the tariffs.

Chinese buyers booked at least 300,000 tonnes in US soybean purchases on Monday after Beijing offered waivers on steep import duties.

Chicago Board of Trade January soybean futures were up 3 cents at $9.00-1/4 a bushel at 12:21 p.m. CDT (1821 GMT), while March corn gained 1-3/4 cents to $3.77-1/2 a bushel.

CBOT March wheat gained 4 cents to $5.26-3/4 a bushel, reversing earlier declines tied to worries about sluggish US exports.

No US wheat was offered in a snap tender by Egypt's state grain buyer, which ultimately bought 355,000 tonnes of Russian, Romanian, Ukrainian and French wheat.

The USDA, however, raised its outlook for US wheat exports in the 2019/20 season by 25 million bushels.