U.S. grains: Markets set one-week highs on export hopes, weather woes

Soybeans recovering from decade low, wheat sets highest since July 10

Chicago | Reuters — U.S. grain and soybean futures touched their highest prices in about a week on Wednesday, as agricultural markets stabilized following recent drops to contract lows.

Hopes for increased U.S. commodity export demand helped support soy prices after the market fell to a 10-year low on Monday amid widespread concerns about the U.S.-China trade dispute, traders said.

China’s buyers have loaded up on soybeans from Brazil, instead of the U.S., because of a 25 per cent tariff on imports of U.S. soy that Beijing enacted on July 6 after weeks of threats.

The shift in Chinese demand has pressured U.S. soy prices and pushed up Brazilian premiums. However, U.S. soybean prices are looking more competitive with Brazilian soybeans, traders said.

“You’ve got beans now at the U.S. Gulf basically at a 25 per cent discount to Brazil, which means you’ve basically spoken for the tariff,” said Jim Gerlach, president of broker A/C Trading in Indiana. “That’s kind of putting a floor under the market.”

Most-active November soybeans traded to $8.63-1/2 a bushel at the Chicago Board of Trade, its highest price since July 11, before paring gains (all figures US$). The contract ended up 0.3 per cent at $8.57-3/4 a bushel.

China’s retaliatory tariffs on U.S. soybeans have triggered bargain shopping by importers in other countries stocking up on cheap U.S. supplies.

More buying emerged on Thursday as the U.S. Department of Agriculture said exporters struck deals to sell 199,500 tonnes of U.S. soybeans to Pakistan for delivery in the 2018-19 marketing year.

“We’re seeing more and more non-traditional business enter the market,” said Terry Reilly, senior commodity analyst for Futures International in Chicago. “That’s giving a little life to the soybean contracts.”

Concerns about declining U.S. soy and corn crop conditions helped underpin prices, after hot and dry weather hit some growing areas, traders said.

For wheat, dryness in European Union countries has coincided with declining harvest prospects in Russia, the world’s largest exporter of the grain.

Underscoring the impact of parched conditions in northern Europe, Germany’s farming association DBV said it was unable to estimate the size of the wheat crop.

“Actual tradeable wheat is getting tight,” Gerlach said.

Most-active CBOT December corn rose 0.3 per cent to $3.61 a bushel after trading as high as $3.62-3/4, its highest price since July 12.

The most-active CBOT wheat contract traded as high as $5.05 a bushel, its highest since July 10, before slipping 0.7 per cent to $4.94-1/2.

— Tom Polansek reports on agriculture and commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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