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Soybeans Rebound on Trade Talks, Smaller Brazil Crop Estimates

February 12, 2019 at 15:43 by Andrew Moran

Soybean futures are trading higher on Tuesday, rebounding from the previous session. The agricultural commodity was driven by optimism over upcoming US-China trade negotiations and estimates of a smaller Brazilian soybean crop. This comes as the US government said that China is importing more domestic soybeans.

March soybean futures rose $0.0525, or 0.58%, to 9.1025 per bushel at 14:08 GMT on Tuesday on the Chicago Board of Trade (CBoT).

Soybean is rebounding after sliding nearly 10 cents on Monday on reports of heavy rainfall hitting South America, something that would boost the crops in areas of Brazil. The latest weather forecasts suggest that more showers are heading the country’s way this week. Should the precipitation continue, then it would stabilize soybean crops in the region.

This week, a delegation of American trade negotiators traveled to Beijing to discuss the trade situation. Investors appear optimistic that there could be key developments in the latest round of talks. The American Soybean Association (ASA) is urging both sides to reach a conclusion that results in US soybean imports receiving top attention.

Beijing and Washington are nearing the end of a 90-day trade truce that is set to expire on March 1. Despite confirming that he will not meet President Xi Jinping, President Donald Trump is positive that an agreement is coming soon, especially on news that China is buying five million tonnes of US soybeans.

They started on a smaller scale, and today they’re starting very big, and I very much appreciate that. It’s a fantastic sign of faith. That’s a tremendous purchase, which will take place now and our farmers are going to be very happy. On behalf of our agricultural industry and on behalf of our farmers, frankly, we appreciate it very much. That’s a very big order.

In recent years, China, the world’s largest soybean consumer, buys on average 30 to 35 million tonnes of soybeans from the US. However, due to the ongoing trade struggles, China has attempted to reduce its consumption, relying on additional markets and domestic output.

Meanwhile, the latest industry forecasts show that Brazil will record a smaller soy crop this season. According to AgRural, an agribusiness consultancy firm, Brazil is expected to harvest 112.5 million tonnes, down from previous projections of 116.9 million.

In other agricultural commodities, March corn futures tacked on $0.0175, or 0.47%, to $3.745 per pound. May wheat futures tumbled $0.0375, or 0.72%, to $5.1675 a bushel. March orange juice futures added $0.005, or 0.55%, to $1.19 a pound.

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