You are here

Wheat, soybean futures reach highest prices since summer 2018

nz_soybean_281239.jpg
US wheat and soybean futures jumped on Friday to their highest prices since summer 2018 on expectations for increased Chinese buying as a result of an initial trade deal.

[CHICAGO] US wheat and soybean futures jumped on Friday to their highest prices since summer 2018 on expectations for increased Chinese buying as a result of an initial trade deal.

Corn futures set an eight-week high.

The markets continued to focus on prospects for more US sales to China after the countries agreed this month to a Phase 1 accord to ease their trade war. The dispute slowed shipments of soybeans, sorghum, pork and other agricultural products to China for more than a year.

Beijing, the world's largest soybean importer, committed to increasing purchases of US farm goods as part of the trade deal, though details have yet to be announced. China has bought around 1 million tonnes of European Union wheat so far this season and could now shift to US supplies under the accord.

"You've got continued rumours that China's going to buy both corn and wheat," said Jim Gerlach, president of broker A/C Trading in Indiana.

The most actively traded wheat futures were up 9-3/4 cents at US$5.58-3/4 a bushel at the Chicago Board of Trade by 10.35am CST (1635 GMT). The contract earlier reached its highest price since August 2018 at US$5.61.

Most-active soybeans futures touched the highest price since June 2018 before pulling back. The contact was down 5-1/2 at US$9.41 a bushel after reaching a session high of US$9.50-1/2.

Corn futures were up 3/4 cent at US$3.89-1/4 a bushel and reached their highest price since Nov 1.

"The market is getting confident that China is going to make meaningful purchases," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

The US Department of Agriculture in a weekly report said export sales of US wheat last week were 714,900 tonnes, toward the high end of analysts' expectations for 200,000 tonnes to 900,000 tonnes.

Worries about unfavorable weather reducing global wheat production helped lift wheat futures, traders said. Expectations that commodity funds will buy wheat futures as they rebalance their portfolios for 2020 also supported prices, they said.

"Concerns of declining world production and lower US acres are driving strength in wheat prices," US brokerage CHS Hedging said in a note.

Oilseed markets were being supported by a run-up in palm oil prices. Malaysian palm oil futures reached their highest in nearly three years on forecasts for lower production coupled with demand for use in biofuel.

REUTERS