U.S. soybean futures jumped on Monday after dropping to their lowest prices in a decade earlier in the session, as the U.S.-China trade dispute looms over agricultural markets.
Technical buying helped soybeans to recover after the most-active contract lost more than five per cent last week, traders said.
The trade dispute has pressured prices because soybeans are the most valuable U.S. agricultural export to China, the world’s top buyer of the oilseed. Chinese buyers have loaded up on soybeans from Brazil, instead of the United States, because of tariffs on U.S. soy that were threatened for weeks and enacted on July 6.
“The bottom line is the market is entering into over-sold territory,” said Karl Setzer, risk management team leader for MaxYield Cooperative in Iowa. “We need a bounce.”
The most-active November soybean contract on the Chicago Board Of Trade rose 1.4 per cent to $8.45-3/4 a bushel, after setting a contract low of $8.26-1/4 (all figures US$).
The August contract slipped to $8.10-1/2 a bushel, the weakest price for a front-month contract since December 2008, before rising to $8.29-1/2.
Traders said hopes for a resolution to the trade dispute helped prices to rise. If the world’s two largest economies struck a deal, “the knee-jerk reaction to it is we would see some demand for U.S. soybeans almost immediately,” Setzer said.
U.S. President Donald Trump has warned he may ultimately impose tariffs on more than $500 billion worth of Chinese goods — nearly the total amount of U.S. imports from China last year — to combat what the U.S. says are Beijing’s trade abuses. China has sworn to retaliate at each step.
On Sunday, though, the top U.S. Republican lawmaker overseeing trade policies called for a meeting between Trump and Chinese Premier Xi Jinping to ease tensions.
“There are some rumours starting to surface that China is willing to come to the negotiating table over the tariff war,” CHS Hedging said in a note.
In other CBOT markets, corn edged up 0.1 per cent to $3.55-1/4 a bushel, and wheat lost 1.7 per cent to $4.88-1/2 a bushel after adding more than five per cent in the two previous sessions.
Advances in the U.S. wheat harvest and expectations for large U.S. corn and soy harvests hung over the markets, traders said.
The U.S. Department of Agriculture, in a weekly update Monday, is expected to report that 74 per cent of the corn crop and 70 per cent of soybeans are in good to excellent condition.
