December 31, 2019 / 1:52 PM / 18 days ago

U.S. grain futures set for yearly rise on U.S.-China demand hopes

PARIS/SHANGHAI (Reuters) - Chicago wheat, corn and soybean futures were set to post annual gains after an outline U.S.-Chinese trade deal that could boost crop exports helped prices rally towards the end of the year.

FILE PHOTO: A grain trailer empties wheat into the pit at the Farmers Cooperative Exchange in Bessie, Oklahoma, U.S., June 12, 2019. REUTERS/Nick Oxford

The crop futures were little changed on Tuesday as markets wound down during the last session of 2019 and awaited further details on the agreement between Washington and Beijing that may be signed in the week ahead.

The most active soybean futures contract on the Chicago Board of Trade had ticked down a quarter of a cent on the day by 1317 GMT to $9.52-1/4 a bushel, just off Monday’s 18-month high of $9.53.

That put the benchmark up 6.4% over the year, in line for its first annual gain in three years.

The most active CBOT wheat contract inched up 0.3% to $5.57-3/4 a bushel, near Monday’s 16-month peak of $5.64-1/2.

Wheat was on course for a 10.8% increase over 2019 and a third straight annual rise.

CBOT corn was unchanged on the day at $3.88-1/4, leaving it up 3.5% on the year so far.

“Consolidation is the word today, particularly on oilseed markets that have been strong,” Arthur Portier of consultancy Agritel said.

“Now we’re going have to see what the U.S.-Chinese deal means in reality and if we see shipments flowing between the two countries.”

China, the world’s largest consumer of soybeans, and the United States struck a “Phase 1” trade deal earlier in December that includes a commitment by Beijing to increase purchases of American agricultural products.

The agreement helped revive soybean prices which had fallen to a 10-year low in May due to demand worries caused by the trade dispute between Washington and Beijing.

Optimism surrounding the planned accord increased on Monday after the South China Morning Post reported Chinese Vice Premier Liu He will visit Washington this week to sign a Phase 1 trade deal, while the White House trade advisor said the agreement would be signed “within the next week or so”.

Oilseed markets, like soybeans, have also drawn support from a rally in palm oil to three-year highs, linked to expectations of lower production and a rise in biofuel demand.

Malaysian palm oil futures closed slightly lower on Tuesday to show a 44% gain for the year. [POI/]

The planned U.S.-China deal has added to healthy demand prospects for wheat, which along with global harvest concerns have supported higher global cash prices.

Export prices for Russian wheat rose for a seventh straight week.

Corn, meanwhile, has been buffeted this year by uncertainty over the U.S. harvest.

Chicago futures climbed to a five-year high after massive rain delays to U.S. planting, before losing some ground due to tepid demand and ample global supplies.

Reporting by Gus Trompiz in Paris and Emily Chow in Shanghai; Editing by Shailesh Kuber/David Evans

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