Soybeans spike amid trade talk optimism, China buying rumours

Soybean futures on CBOT rallied nearly 20 c/bu during trading on Friday as rumours of China buying US soybeans spread in the market, five sources said.

Rumours abounded Friday that China was seeking offers for US soybeans out of PNW for October-December deliveries, with the most liquid soybean futures contract on CBOT surging nearly 20 cents – its biggest intraday move since July 1.

"There is rumour that China will buy US soybeans, but the market has not seen any offers being sought," one market source told Agricensus.

The rumour was also heard by four traders at different houses, but none confirmed that any firm offer was asked by Chinese state buyers.

After weeks of virtual disinterest in the renewal of US-China trade talks, a phone call made by US treasurer Steve Mnuchin to Chinese counterparts appears to have piqued market interest.

Officials from the US and China spoke on the phone on Thursday to discuss a potential face-to-face meeting for the ongoing trade dispute.

Although details were scant, rumours of China buying US soybeans soon spread in the market on Friday.

President Trump said after the US-China meeting at the G20 summit at the end of June that China had agreed to buy “large amounts” of US agricultural products, although no large-scale soybean purchases have been reported so far.

“Cash brokers (are telling) me that [one of the majors] is saying that China is buying beans,” a Brazilian source said.

“China (is) rumoured to have just bought US sorghum,” the source added.

In the Brazilian cash markets, premiums at origin started to respond with bids for September loading reported at 92 c/bu over September futures equating to a flat price of $367.25/mt, up $4/mt from Thursday’s assessment at $362.75/mt.

But others were more hesitant about ascribing US-China developments alone to a single phone conversation and rumours.

“Just heard the rumour…. [but] with the real move yesterday it would make more sense if China bought South American soybeans. But a government purchase to show China is serious in continuing the talks would not be out of the question,” Terry Reilly from Futures International told Agricensus.

Futures also rallied on drier weather conditions expected after next week and drier conditions affecting European oilseed crops, Reilly added.