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Wednesday, July 6, 2022

Soybeans down 1pc on US-China trade war fears, wheat up again

Soybeans down 1pc on US-China trade war fears, wheat up againPARIS/SYDNEY: US soybean futures fell more than 1 percent on Wednesday, retreating from a six-week high touched in the previous session as the market was hit by worries US President Donald Trump could propose additional tariffs on Chinese goods.

Wheat rose for a third session in a row near a one-year high amid fears over global supplies with more signs of damage in Germany, while corn prices edged lower, having rallied more than 1 percent in the previous session.

The most active soybean futures on the Chicago Board of Trade were down 1.3 percent at $9.06-3/4 a bushel by 1123 GMT. They firmed 3.1 percent on Tuesday, when prices hit their highest since June 15 at $9.22-1/4.

The losses came as a source familiar with the matter said on Tuesday the Trump administration plans to propose a 25 percent tariff on $200 billion in Chinese imports, with an announcement possibly coming as early as Wednesday. China is the world’s top soybean buyer.

“Oilseed prices continue to be one of the best barometers of the US-China trade dispute,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.

The most active wheat futures were up 0.7 percent at $5.55-1/4 a bushel. They closed up 1.3 percent on Tuesday, having hit their strongest since July 2017 at $5.65 a bushel.

German farmers association DBV expects grain harvests in the European Union’s No.2 producer to slump about 20 percent on the year to around 36 million tonnes after crops suffered massive damage from drought and a heatwave.

Germany will harvest about 18 million tonnes of winter wheat in 2018, down around 25 percent on 2017, the DBV said in a report.

Benchmark December milling wheat on Paris-based Euronext rallied to a 3-1/2 year high after the news to 208.50 euros ($243.59) a tonne, up more than 2 percent.

Commerzbank raised its price estimate to 205 euros a tonne.

“However, we are sceptical about the wheat price’s ability to rise noticeably further in the mid-term. This may be the case in the next few days and perhaps weeks. Yet most of the negative news from the European region should already be priced in by now,” it said in a note.

European wheat prices are likely to fall slightly back to 200 euros per tonne in the fourth quarter, it added.

Forecasters have cut wheat harvest expectations for Russia, the European Union and Australia due to bad weather, while prolonged dryness in parts of the US Midwest has likely dragged down yield potential for corn and soybean crops.

The most active corn futures were down 0.1 percent at $3.86 a bushel, having gained 1.4 percent in the previous session.

Copyright Reuters, 2018

Source: Brecorder

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