Soybeans Lead Gains in Agriculture on U.S.-China Trade Truce

(Bloomberg) -- Soybeans led advances among U.S. crop futures after the White House said China agreed to immediately restart buying American farm products as part of a trade truce between the two countries.

The oilseed jumped as much as 3.2 percent to the highest since June in Chicago, as corn and wheat also climbed, while Chinese soybeans fell on expectations of more supply. President Donald Trump and his Chinese counterpart agreed to pause the introduction of new tariffs and intensify trade talks, a significant turnaround in relations between the U.S. and one of its top customers for farm products.

Still, sustained price gains will depend on how quickly shipments of soybeans and other products resume given the higher prices they'll command in China due to the tariffs. The fact that China made no mention of agriculture in its statement after the meeting may also increase trader concerns over whether these purchases will materialize.

“The price spike in Chicago soybeans and the fall in Dalian is a normal market reaction to the U.S.-China trade truce because China has agreed to start buying agricultural products from American farmers immediately,” said Monica Tu, an analyst at researcher Shanghai JC Intelligence Co. Still, “the market is very concerned about the outcome of further negotiations,” and whether there will be big purchases in the next few weeks, she said.

• Soybeans for January delivery rose 2 percent to $9.12 1/2 a bushel in Chicago, after earlier reaching the highest for a most active contract since June 19.

As tit-for-tat trade tariffs ratcheted up between the nations this year, China slapped retaliatory duties on U.S. soybeans, pork and a host of other agricultural goods. Soybean futures tumbled as a result, and global agriculture trade flows were rerouted.

In exchange for the tariff pause, China pledged to buy “a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products,” according to the White House statement.

See here for analysis on the trade spat's impact on U.S. farms and agriculture

To contact the reporter on this story: Alfred Cang in Singapore at acang@bloomberg.net

To contact the editors responsible for this story: Anna Kitanaka at akitanaka@bloomberg.net, Nicholas Larkin, Dylan Griffiths

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