December 3, 2018 / 6:52 AM / 6 months ago

GRAINS-Soybeans climb to highest since June on U.S.-China trade truce

    * Soybeans up around 2 pct, wheat gains 1.4 pct, corn 1.2
    * Optimism after U.S.-China trade truce drives prices higher

 (Adds quote, updates prices)
    By Naveen Thukral
    SINGAPORE, Dec 3 (Reuters) - Chicago soybeans jumped on
Monday to their highest in almost six months, rising 1.9 percent
after Washington and Beijing agreed a 90-day truce that will
permit talks to end a festering trade war that has roiled
commodities markets.
    The White House said on Saturday that President Donald Trump
told Chinese President Xi Jinping during talks in Argentina that
he would not boost tariffs on $200 billion of Chinese goods to
25 percent on Jan. 1, as previously announced.
    Beijing for its part agreed to buy an unspecified but "very
substantial" amount of agricultural, energy, industrial and
other products, the White House said in a statement.
    "The initial agreement did include a specific promise for
China to buy significant amounts of U.S. agricultural products
which, if realised, will be very supportive for prices," said
Ole Houe, director of advisory services at brokerage IKON
Commodities in Sydney.
    "However, there is a long way to go to for both U.S. and
China before any real progress is made on the agreement and I
think that all we have done for now is added more volatility to
the market."
    The Chicago Board of Trade most-active soybean contract
 was up 1.9 percent to $9.11-1/2 a bushel by 0637 GMT,
after hitting its highest since mid-June at $9.24 a bushel.
    Wheat gained 1.5 percent to $5.23-1/4 a bushel and
corn advanced 1.2 percent to $3.82-1/4 a bushel. While
corn hit its highest since early August, wheat touched its
highest since late September.
    Meanwhile China's soymeal futures lost 1.4 percent
to 3,014 yuan ($436.93) a tonne. 
    While markets welcomed the U.S.-China trade truce news, some
observers were cautious on how much had been achieved. 
    "A range of views on the trade talks have, and will, emerge
over the next day or so," said Tobin Gorey, director of
agricultural strategy, Commonwealth Bank of Australia. "A lot of
that opinion is likely to assess the progress as being modest."
    The trade war between the two countries has drastically
curbed U.S. soybean exports to China, by far the world's biggest
bean importer.  
    After imposing retaliatory tariffs on U.S. soybean imports,
China has been taking mainly Brazilian beans, threatening to
leave a bumper U.S. harvest piled up in storage or rotting in
    But gains in U.S. soybeans and other feed grains are likely
to be limited amid slowing demand in China.
    China's imports of soybeans are set to drop as an outbreak
of African swine fever hits its huge pig herd and saps demand
for the animal feed ingredient, making it easier for buyers to
keep shunning U.S. cargoes amid the Sino-U.S. trade war.

    The Commodity Futures Trading Commission's weekly
commitments of traders report also showed that non-commercial
traders, a category that includes hedge funds, trim their net
short position in soybeans in week to Nov. 27.

 Grains prices at 0637 GMT
 Contract    Last    Change  Pct chg  Two-day chg  MA 30   RSI
 CBOT wheat  523.25  7.50    +1.45%   +2.30%       512.82  68
 CBOT corn   382.25  4.50    +1.19%   +2.82%       377.41  69
 CBOT soy    911.50  16.75   +1.87%   +2.36%       876.50  71
 CBOT rice   10.94   $0.05   +0.51%   +1.11%       $10.81  63
 WTI crude   53.45   $2.52   +4.95%   +3.89%       $59.33  
 Euro/dlr    $1.136  $0.005  +0.42%   -0.25%               
 USD/AUD     0.7362  0.005   +0.64%   +0.60%               

($1 = 6.8982 Chinese yuan renminbi)

 (Reporting by Naveen Thukral
Editing by Kenneth Maxwell, Amrutha Gayathri)
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