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Soybeans Close Higher, Wheat Jumps on Signs of Demand

Futures end session higher as bean sales jump 42% week-to-week.

Soybeans closed higher and wheat futures jumped Friday on signs of strong demand for U.S. supplies. 

Traders were optimistic this morning that a trade deal will be worked out between the U.S. and China even as uncertainty looms over whether the Asian nation will in fact resume purchases of soybeans. China officials said this week they’re confident that an agreement can be reached, though importers have yet to officially announce any purchases from U.S. supplies. 

Still, demand for soybeans was strong last week as sales to overseas buyers totaled 890,900 metric tons, up 42% week-to-week and 87% from the prior four-week average, the Department of Agriculture said.

Corn futures also rose on continued strong demand for U.S. grain. While sales were down 7% on a weekly basis, they were up 26% from the previous average, the USDA said. 

Soybean futures for January delivery closed 6½¢ higher at $9.16 a bushel on the Chicago Board of Trade. Soymeal fell 40¢ to $311.80 a short ton, and soy oil lost 0.02¢ to 28.69¢ a pound. 

Wheat futures, meanwhile, rose as export sales surged week-to-week. Exporters sold 711,800 metric tons of the grain to overseas buyers, up 89% from the previous week and 58% from the prior four-week average, the USDA said.

Egypt also bought 350,000 tons of wheat from Russia and Ukraine, though dealers continue to say the North African country is having a hard time paying suppliers.

March wheat jumped 16¼¢ to close at $5.31¾ a bushel in Chicago while Kansas City futures gained 16¢ to $5.11½ a bushel. 

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Thursday’s Market Recap

Soybean futures closed down Thursday, though they were off their lows for the day, as trade tensions once again flared after the arrest of a Chinese technology company executive, casting a shadow over agreed-upon negotiations. 

Meng Wanzhou, the chief financial officer at Huawei Technologies, was arrested in Vancouver on December 1, reportedly at the request of the U.S. That puts negotiations agreed upon by presidents Trump and Xi Jinping in question and casts doubt on planned talks between Washington and Beijing. 

The Globe and Mail reported that the arrest was part of an investigation about whether Huawei violated U.S. sanctions on Iran. China has demanded Meng’s release and said the arrest violates her human rights, according to the Associated Press, which also said a former Canadian envoy warned that the case may lead to retaliation against American and Canadian executives.  

The increase in tensions comes at a bad time, just as traders and hedgers were starting to become more optimistic about the prospects of normalized trade between the U.S. and China. Shipments from the U.S. to overseas buyers so far in the 2018-2019 marketing year are down 43% from the same period a year earlier, according to the Department of Agriculture. Sales are down 32% year-over-year. 

Bean futures fell as low as $8.97 a bushel on the news, yet there's still optimism that the trade deal will happen despite the escalation of tensions. China said on Wednesday that it was "very confident" that the countries will be able to find common ground. 

Soybean futures for January delivery closed 3¾¢ lower at $9.09 3/4 a bushel on the Chicago Board of Trade. Soymeal lost $1.30 to $312.60 a short ton, and soy oil declined 0.17¢ to 28.67¢ a pound. 

Corn for March delivery declined 1½¢ to $3.82¾ a bushel.

Wheat futures fell on reports that Egypt is having trouble paying suppliers. 

March wheat dropped 2¾¢ to $5.15 1/4 a bushel in Chicago while Kansas City futures lost 2½¢ to $4.95½ a bushel. 

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Wednesday’s Market Recap

Wheat futures closed lower on Wednesday amid reports that Egypt is having trouble paying for cargoes, adding to worries that demand for U.S. supplies will worsen. Investors were cautiously higher on soybeans. 

Reuters reported the North African country is struggling to pay suppliers, which likely will exacerbate exporters’ woes. Accumulated exports of wheat from the U.S. to offshore buyers since the start of the marketing year on June 1 are down 18% from the same period a year earlier, the Department of Agriculture said. 

Total commitments to purchase U.S. wheat are down 13% year-over-year, according to the government. 

March wheat dropped 4¼¢ to $5.18¼ a bushel on the Chicago Board of Trade while Kansas City futures lost 7¾¢ to $4.97½ a bushel. 

Soybeans rose slightly to close higher Wednesday as investors await confirmation that China will in fact resume purchases of inventories from the U.S. 

President Trump said on Saturday that the U.S. would hold off on increasing its tariff rate on imports from the Asian nation to 25% from 10% on January 1, and that China would immediately resume purchases of American agricultural products. 

China’s Commerce Ministry said in a vague statement today that it would begin “implementing specific issues on which consensus has been reached, and the sooner, the better.” China still hasn’t confirmed Trump’s assertions that it will curb auto tariffs or buy more agricultural products from the U.S.

If realized, that would help soybean exports rebound from low levels seen since the start of the marketing year on September 1. Shipments so far in the 2018-2019 year are down 43% from the same period a year earlier, according to the U.S. Department of Agriculture. Sales are down 32% year-over-year. 

Soybean futures for January delivery rose 1½¢ to $9.13¼ a bushel in Chicago. Soymeal is down 80¢ to $313.90 a short ton, and soy oil declined 0.05¢ to 28.85¢ a pound. 

Corn for March delivery was unchanged at $3.84¾ a bushel.

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Tuesday's Market Recap

Soybean futures closed higher Tuesday amid optimism that China will increase imports of supplies from the U.S. after presidents Trump and Xi Jinping met over the weekend. 

Trump said on Saturday that the U.S. would hold off on increasing its tariff rate on imports from the Asian nation to 25% from 10% on January 1, and that China would immediately resume purchases of American agricultural products. 

Some analysts and economists have expressed skepticism over the deal as Beijing hasn’t reiterated Trump’s assertions. Morgan Stanley analysts on Monday said the trade deal struck between the world’s two largest economies turned out better than expected, though Scotiabank said they expected the cursory deal as Trump doesn’t want to carry concerns about slowing economic growth into the 2020 presidential election cycle.

Negotiators have 90 days to strike a deal, though it’s unclear when the clock started ticking, or when the rate would jump to 25%. Investors seem upbeat on the prospects of a new trade deal. White House economic adviser Larry Kudlow said progress on a trade agreement would happen “very quickly.”

“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,” the White House said in a statement over the weekend. “China has agreed to start purchasing agricultural product from our farmers immediately.”

If realized, that would help soybean exports rebound from low levels seen since the start of the marketing year on September 1. Shipments so far in the 2018-2019 year are down 43% from the same period a year earlier, according to the U.S. Department of Agriculture. Sales are down 32% year-over-year. 

Soybean futures for January delivery closed up 4 3/4¢ to $9.10 1/2 a bushel on the Chicago Board of Trade. Soymeal lost 20¢ to $314.20 a short ton, and soy oil gained 0.27¢ to 28.84¢ a pound. 

Corn for March delivery added 2 3/4¢ to $3.84 3/4 a bushel.

March wheat rose 1/2¢ to $5.21 3/4 a bushel while Kansas City futures lost 2 1/2¢ to $5.04 a bushel. 

In outside markets, West Texas Intermediate oil declined 0.2% and international benchmark Brent futures lost 0.1%. The Dow Jones Industrial Average fell 800 points, while the dollar also dropped. 

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Monday’s Market Recap

Soybean futures jumped on Monday after the U.S. announced a deal with China in which it would halt plans to increase tariff rates and said the Asian country will resume purchases of agricultural products. 

In a statement, the White House said Saturday after a meeting between presidents Trump and Xi Jinping that the tariff rate on $200 billion worth of Chinese products will remain at 10% on Jan. 1 instead of rising to 25%. 

"China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries," the statement said. "China has agreed to start purchasing agricultural product from our farmers immediately."

Exports of soybeans since the start of the marketing year on Sept. 1 are down 43% from the same period a year earlier, according to the U.S. Department of Agriculture. Sales are down 32% year-over-year. 

The presidents of the two largest economies in the world have agreed to start negotiations to make structure changes with respect to technology transfer, intellectual property, non-tariff barriers, cyber intrutions and theft and agriculture.

The agreement calls for a deal to be worked out within 90 days, though if one isn't reached, the tariffs on China's products will jump to 25%, as originally planned, the White House said. Details of the deal were sparse, and months of negotiations lie ahead, though Morgan Stanley analysts said the trade deal topped expectations. 

Soybean futures for January delivery jumped 10¢ to $9.04 3/4 a bushel on the Chicago Board of Trade. Soymeal added $3.80 to $314.30 a short ton, and soy oil gained 0.44¢ to 28.50¢ a pound. 

Corn for March delivery closed up 4¢ to $3.81 3/4 a bushel.

March wheat rose 3 1/2¢ to $5.19 1/4 a bushel while Kansas City futures gained 4 1/2¢ to $5.04 3/4 a bushel on Monday. 

In outside markets, West Texas Intermediate oil jumped 4.2% and international benchmark Brent futures gained 4.1%. The Dow Jones Industrial Average surged 309 points on the trade deal, while the dollar dropped. 

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