US soybeans turn up on hopes for Chinese buying; wheat sags
CHICAGO: US soybean futures turned higher on Tuesday as traders anticipated potential Chinese purchases of US agricultural products, and shrugged off a bearish monthly global soy inventories report from the US Department of Agriculture.
Corn firmed, led by soybeans, but wheat futures fell after the USDA raised its forecasts of US and global wheat ending stocks more than most analysts expected.
The USDA also raised its forecast of world 2018/19 soy ending stocks to 115.33 million tonnes, topping a range of estimates.
At 1:06 p.m. CST (1906 GMT), Chicago Board of Trade January soybeans were up 5-3/4 cents at $9.15-1/2 per bushel, but stayed within a trading range established in recent days. March corn added 1/2 cent at $3.84-3/4 a bushel.
"All indications seem to be that you should see an announcement here at least for China to buy enough beans to replenish reserves," said Terry Linn, analyst with Linn & Associates, a Chicago brokerage.
"The market is terrified right now," Linn said. "How can you sell beans when you've got this trade announcement coming out at any time?"
US soybean exports to China, by far the world's largest buyer, collapsed after China slapped tariffs on US supplies as the trade war between the two countries heated up.
China and the United States discussed a road map for the next stage of their trade talks on Tuesday during a telephone call as a report that China is moving to cut tariffs on American-made cars boosted automakers' shares.
A decline in Brazilian soy export prices in recent weeks and falling Chinese domestic soy prices hint at prospects for a package of purchases of US agricultural goods, Linn said.
US President Donald Trump and Chinese President Xi Jinping agreed at a Dec. 1 meeting in Argentina to a truce that delayed a planned Jan. 1 US increase of tariffs to 25 percent from 10 percent on $200 billion worth of Chinese goods.
"The markets are still waiting for concrete evidence that China is again buying US soybeans," said Matt Ammermann, commodity risk manager with INTL FCStone. "There were reports that China may buy 5 million tonnes of US agricultural products but real signs of purchases are lacking, especially in US soybeans."
CBOT wheat futures declined, with the March contract down 4-3/4 cents at $5.20-1/2 per bushel.
Wheat was pressured after the USDA, in its monthly supply/demand report, raised its forecast of US 2018/19 wheat ending stocks to 974 million bushels from 949 million in November, above the average trade expectation for 956 million bushels.
The increase reflected a reduction in the government's forecast of US wheat exports.
"USDA taking the wheat exports down by 25 million bushels basically removes hope that the US will regain a considerable amount of market share in the second half of the crop year," said Terry Reilly, senior analyst with Futures International.