U.S. grains: Soy futures post biggest monthly gain in nearly five years on China trade optimism

Chicago | Reuters — U.S. soybean futures climbed to a 15-month high and posted their biggest monthly gain in nearly five years on Friday following a rally fueled by the prospect of revived exports to China.

Prices Sv1 exceeded a July 2024 peak hit on Thursday after U.S. officials said China, the world’s biggest soy importer, would buy tens of millions of tons of American crops in the next few years as part of a trade deal.

China previously shunned U.S. soybeans due to its trade conflict with Washington and bought from South America instead.

U.S. Treasury Secretary Scott Bessent said on Thursday that China had agreed to buy 12 million metric tons of U.S. soybeans through January.

“This is going to be something where we should see sales almost every other day,” said Rich Nelson, chief strategist for Allendale.

Bessent said China also agreed to buy 25 million metric tons of U.S. soybeans annually for the next three years.

The commitment fell short of U.S. exports to China in recent years. However, the pledge likely exceeds what China would have bought, as it has been shifting its purchases to top exporter Brazil, Nelson said.

“Realistically, within two years, we’d be easily under 20 million tons, if not moving into the 18-million-ton timeframe,” he said. “Compared with where we would be, this is a positive development.”

The most-active soybean contract on the Chicago Board of Trade Sv1 ended 7-1/2 cents higher at $11.15-1/4 per bushel and made its strongest monthly advance since December 2020.

CBOT corn and wheat futures also edged higher, though Washington and Beijing did not announce specific trade commitments for those crops.

Corn Cv1 rose 1-1/4 cents to $4.31-1/2 per bushel while wheat Wv1 finished up 9-3/4 cents at $5.34 per bushel. Both grains posted monthly gains.

Traders remained cautious over how China’s soybean purchasing pledge will translate into actual U.S. exports.

“Confirmation from China is still pending,” Commerzbank analysts said. “Until this happens, the upside potential for soybean prices is likely to be limited.”

— Reporting by Tom Polansek in Chicago, Gus Trompiz in Paris and Ella Cao and Lewis Jackson in Beijing.