U.S. grains: Soybeans sink on concerns about China trade talks

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Chicago | Reuters — U.S. soybean futures fell for the third time in four sessions on Tuesday on worries that the United States and China remain far apart in resolving a bitter trade fight that has slashed U.S. soy imports by the world’s top buyer.

Corn and wheat followed soybeans lower, with technical selling accelerating declines across grains markets.

A firming dollar, which makes U.S. exports less attractive to buyers holding other currencies, added pressure.

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Traders focused on comments from U.S. Senator Chuck Grassley that the U.S. Trade Representative saw little progress made on structural issues in trade talks between Washington and Beijing last week.

Although China has booked about five million tonnes of U.S. soybean purchases since a 90-day trade war truce was agreed to on Dec. 1, there have been few details of any further progress in the talks. The two sides are trying to reach a deal that avoids a scheduled March 2 escalation of U.S. tariffs on Chinese goods.

“The market is showing a clear message of concern after the comments by Grassley,” said Rich Nelson, chief strategist with Allendale Inc.

“It calls into question the hopes that many in the market are still holding about China coming in and magically buying 10 or 15 million tonnes in a one-time purchase,” he said.

Chicago Board of Trade March soybeans fell 10-1/4 cents to $8.93-1/4 a bushel, its lowest since Jan. 2 (all figures US$).

March corn fell 7-1/4 cents, to a six-week low of $3.71-1/4 a bushel. The 1.9 per cent drop was the steepest decline in 3-1/2 months.

CBOT March wheat fell 3-1/4 cents, to $5.11 a bushel.

Traders remain concerned about dry weather in Brazil and excessive rains in Argentina that have trimmed soybean yield prospects in both countries. Longer term forecasts, however, indicate more normal weather, suggesting many of the weather risks have already been absorbed by the market.

“There are forecasts of more rain in Brazil but the market wants to see more evidence that crops are being helped,” said Matt Ammermann, commodity risk manager with INTL FCStone.

A stronger-than-anticipated December U.S. soybean processing pace also failed to temper the soybean slide.

The National Oilseed Processors Association on Tuesday said last month’s soybean crushings topped the average trade estimate at 171.759 million bushels, the third highest monthly crush on record and the most ever for the final month of the year.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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