Soybean futures jumped to the highest in more than three months, while corn extended gains, on news that the US and China reached a partial agreement in their trade dispute that could lay the groundwork for a broader deal.
China would agree to some agriculture concessions as part of the deal, while the US would offer tariff relief, people familiar with the matter said.
China had already discussed boosting purchases of US agriculture products such as soybeans, pork and wheat.
The world’s top soy importer had been buying oilseed and pork in the US as recently as last week, US government data showed.
Hog, cotton and ethanol futures also gained in Chicago.
“The key will be whether these are true concessions — enforceable elimination of trade barriers and tariffs on US farm products, including soybeans, corn, [distiller’s dried grains with solubles], wheat and ethanol, to name a few — or whether it’s just China’s commitment to step up purchases,” said Bryce Knorr, a senior grain market analyst at Farm Futures.
The meeting and potential risks surrounding wintry weather in the northern US and in southern Canada that could curb supplies of some crops prompted some grain traders to close out bets.
“It feels like a huge risk-off event ahead of the weekend,” said Joe Nussmeier, a broker at Frontier Futures in Minneapolis.
Some traders remained skeptical that buying soybeans from the US represented a significant breakthrough in the overall trade talks, people familiar with the matter said.
China has been buying soybeans in Brazil in the past two days after some goodwill purchases from the US and the strategy of switching between the two countries has helped China secure lower prices, the people said.
“China needs soybeans right now, because Brazil’s supplies are exhausted, but even if they wind up taking 30 million metric tons as reported, total US exports likely would still be” lower than before the trade dispute began, Knorr said.
Goodwill purchases of soybeans have been taking place since December and a full deal still has not been reached.
“I am a bit pessimistic this could be the real deal, as we have stumbled on the finish line a few times,” said Niko Anderson, a grain broker at SCB Group in Chicago. “While recent export sales out of the Pacific Northwest seem very encouraging, we have seen China buy before without any deal actually being reached.”
In other commodities trading on Friday, silver fell US$0.06 to US$17.46 per ounce and copper rose US$0.01 to US$2.62 per pound.
Spot gold dropped 0.8 percent to US$1,493.85 an ounce.
Additional reporting by staff writer, with Reuters and AP
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