December 30, 2019 / 4:16 AM / a month ago

GRAINS-U.S. wheat, soybeans firm on China purchase hopes

(Updates with background)

SHANGHAI, Dec 30 (Reuters) - U.S. wheat and soybean prices rose on Monday on hopes that China will ramp up agricultural purchases following a recently struck trade deal with the United States.

China, the world’s largest consumer of soybeans, and the United States struck a Phase 1 trade deal earlier in December that includes a commitment by Beijing to increase purchases of U.S. agricultural products, though a formal agreement has not yet been signed.

The most active soybeans futures were up 0.5% at $9.46-1/4 a bushel by 0330 GMT. It climbed to its highest since June 2018 at $9.50-1/2 in the previous trading session before closing lower.

The most active wheat futures were up 0.2% at $5.57-1/4 a bushel, heading for a fourth straight session of gains. The contract hit its highest August 2018 at $5.61 on Friday.

Wheat prices were supported by recent strong demand. Iran has bought around 1 million tonnes of wheat, mainly of Russian, in recent weeks, while Morocco could step up imports after the government suspended customs duty on soft wheat.

Chin’s purchases of European Union wheat, meanwhile, are expected to reach about 1 million tonnes, led by a run of French imports.

China is the world’s largest wheat grower but also imports several million tonnes to cover its needs. It rarely sources the grain from the EU, partly due to ocean freight costs. But its trade standoff with the United States and tensions with Australia and Canada have forced it to look elsewhere for wheat.

Corn futures, however, dipped in early trade on Monday. The most active futures contract was down 0.2% to $3.89-1/4 a bushel after the U.S. Department of Agriculture on Friday reported export sales in the Dec. 19 week were at the lower end of market expectations.

In a weekly report, the USDA said export sales of U.S. corn were 626,100 tonnes (old and new crop years combined), toward the lower end of trade expectations for 500,000 tonnes to 1,200,000 tonnes.

It also said export sales of U.S. wheat were 714,900 tonnes, toward the higher end of analysts’ expectations for 200,000 tonnes to 900,000 tonnes.

In other related news, expected adverse weather across Ukraine may significantly damage winter grain crops, especially those which were sown late, consultancy APK-Inform quoted Ukrainian agricultural scientists as saying on Friday. (Reporting by Emily Chow; Editing by Shailesh Kuber and Subhranshu Sahu)

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