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U.S. grains: Soybeans rise on bargain buying, sale to Mexico

Corn, wheat futures trade slightly lower

Chicago | Reuters — Bargain buying and a major sale of U.S. soy to Mexico on Wednesday helped lift U.S. soybean futures for a second day, traders said, while corn and wheat futures slipped.

Soybeans are recovering after the most actively traded contract last week fell to its lowest price in nearly 10 years.

The escalating trade row between Washington and Beijing has recently weighed on the market since soybeans are the biggest U.S. agricultural export to China. Shipments have nearly dried up since Beijing applied an additional tariff on U.S. soybeans in July.

Other buyers, however, have stepped up purchases.

The U.S. Department of Agriculture (USDA) said on Wednesday that Mexico bought 671,934 tonnes of U.S. soybeans for delivery during the 2018-19 marketing year.

That was the biggest one-day sale of U.S. soybeans to Mexico going back to at least 1999.

“Of course the Mexico story is great,” said Rich Nelson, chief strategist for Illinois-based broker Allendale. The sale shows “very aggressive forward-booking from Mexico,” he added.

Most-active soybean futures on the Chicago Board of Trade (CBOT) rose 0.5 per cent to $8.50 a bushel (all figures US$).

CBOT wheat shed 0.6 per cent to close at $5.17-1/2 a bushel. Corn slipped 0.2 per cent, to $3.63 a bushel. Earlier on Wednesday, the front-month corn contract notched its highest price since Aug. 20.

“Looks like soybeans are finding some support at these levels as low prices are attracting some buying,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

“The current U.S. prices show a significant discount to South American beans to the point where sales hypothetically would work into China even with the tariffs.”

China has shifted soy purchases from the United States to Brazil, the world’s No. 1 exporter of the oilseed, and Argentina because of the trade war with Washington, according to analysts and trade data.

Brazil and Argentina are expected to import more U.S. soybeans as a result, analysts said.

U.S. soybeans have also gained market share in Europe.

On Thursday, traders will assess weekly U.S. export sales data from the U.S. Department of Agriculture. Analysts expect soybean sales of 600,000 to 1 million tonnes, corn sales of 900,000 to 1.3 million tonnes and wheat sales of 250,000 to 500,000 tonnes.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Naveen Thukral in Singapore, Sybille de La Hamaide in Paris and Karl Plume in Chicago.

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