BEIJING (Reuters) - China’s most actively traded soymeal futures fell by the maximum 5 percent at the market open on Friday, its biggest daily drop in almost six years, as traders reacted to positive comments after a phone call between U.S. President Donald Trump and Chinese President Xi Jinping.
Soy traded on the Dalian Commodity Exchange fell to 3,105 yuan ($447.99) a tonne, a two-month low, in its biggest daily decline since February 2013, surprising some market observers.
“It’s a surprisingly big reaction based on a tweet that they’re going to talk,” said Darin Friedrichs, consultant at INTL FCStone in Shanghai.
“I thought at this point the market discounts that kind of stuff because previously we’ve had quick reversals,” he added, referring to the rapid changes in sentiment on trade by President Trump.
Trump and Xi both expressed optimism late Thursday about resolving a bitter trade dispute, with Trump saying on Twitter that trade discussions with China were “moving along nicely,” and that he planned to meet with Xi on the sidelines of the G20 leaders summit.
In comments to state media, Xi said he hoped China and the United States would be able to promote a steady and healthy relationship, and that he was willing to meet with Trump in Argentina.
The festering trade dispute between China and the United States has brought purchases of U.S. soybeans by China to a virtual standstill, tightening supplies of the beans used to make soymeal and driving up prices.
Soymeal prices have been hovering at record levels for much of the year and shot to 3,450 yuan a tonne earlier this month, as the market anticipated much tighter supplies of soybeans in the fourth quarter, normally a peak time for U.S. supplies.
The spread between the January and May contract fell today from 455 yuan a tonne to around 330 yuan as market fears over supplies in coming months eased.
Rapemeal futures traded on the Zhengzhou Commodity Exchange fell 5 percent to 2,346 yuan per tonne, a record daily decline.
Rapemeal is a commonly used protein substitute for soymeal in animal feed.
Soybean futures also fell 2.9 percent to 3,448 yuan per tonne on the news, marking their biggest daily fall since 2012.
Reporting by Dominique Patton; editing by Richard Pullin