Soybeans Advance as U.S.-China Trade Talks Move Forward

(Bloomberg) --

Soybean futures climbed for the fourth straight day as officials signaled optimism that the U.S. and China will reach a trade deal.

China was processing applications for tariff waivers on imports of U.S. soy and pork, a procedural step that could set the stage for a broader agreement. The Asian nation is the top consumer of each commodity, and U.S. shipments have been impeded by the tariffs.

January soybeans rose as much as 1.1%, capping the longest streak of gains since September. February lean hog futures jumped as much as 3.7% before erasing those gains, with the biggest U.S. herd since 1943 still anchoring prices.

The deadly African Swine Fever virus that has killed tens of millions of hogs in China and elsewhere in Asia prompted an urgent need for meat imports. Waiving tariffs would open the door for supplies to flow more freely.

“I think a trade deal is imminent and it’s going to get done,” Dennis Smith, senior account executive at Archer Financial Services Inc. in Chicago.

The countries are working toward a deal before a Dec. 15 deadline for more tariffs, and U.S. National Security Adviser Robert O’Brien said that Washington is close to reaching a phase-one agreement.

Soybeans Advance as U.S.-China Trade Talks Move Forward

“It remains to be seen how quickly soybean imports from the U.S. recover if a ‘Phase 1 trade deal’ is agreed,” Carsten Fritsch, an analyst at Commerzbank AG, said in a report.

Chicago soybeans for January delivery settled 0.6% higher at $8.895 a bushel and February hogs about steady at 67.550 cents per pound.

Even with the recent rebound, soybean prices remain slightly lower for the year -- on pace for a third straight annual loss. Large South American harvests loom in the coming months, boosting competition for American supplies. The U.S. Department of Agriculture will update its global crop forecasts next week, and analysts expect slightly bigger outlooks for both Brazil and Argentina.

Other markets
  • March corn futures were steady, losing 1.6% for the week.
  • March wheat also steadied, finishing the week 3.2% lower.

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