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US wheat rises for 2nd session on strong demand, soybean prices rebound

Chicago wheat futures rose for a second session on Wednesday, gaining nearly 1 percent on expectations of increased demand for U.S. cargoes as rival exporters in the Black Sea region run out of surplus supplies.

Soybean prices bounced back and were set to gain for five out of six sessions, as Washington-Beijing trade talks boost hopes for higher U.S. soybean sales to top importer China.

The most-active wheat contract on the Chicago Board of Trade had climbed 0.9 percent to $5.22-1/4 a bushel by 0227 GMT, having hit its highest since Dec. 20 at $5.24-1/2 a bushel on Tuesday.

Soybeans were up 0.4 percent at $9.21-3/4 a bushel after closing down 0.6 percent on Tuesday. Corn added 0.4 percent to $3.81-1/2, having closed down 0.6 percent in the previous session.

“Global wheat markets have been simmering for a long time and are now threatening to break out,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

“For most of 2018 we had Russian wheat weighing heavily on the market, but that pressure is pretty much gone as we start 2019. We have seen U.S. wheat being about the cheapest wheat in the world and there are strong signs demand has been picking up over the last week.”

China and the United States will continue trade talks in Beijing for an unscheduled third day as officials from the world’s two largest economies look to resolve their bitter trade dispute that has slashed China’s imports of U.S. soy.

In a positive sign on Tuesday, China approved five genetically-modified crops for import, the first in about 18 months, which could boost its overseas grains purchases and ease pressure from the United States to open its markets to more farm goods.

Adverse crop-weather in top soybean exporter Brazil is providing further support to prices.

Brazil has harvested two enormous soybean crops in a row and will likely see a third in 2019, but the volume might not be as big as market participants were initially expecting, potentially a particular concern for top customer China, Karen Braun, market analyst for Reuters, wrote in a column.

“Abundant Brazilian supply has allowed China to hold off longer on buying U.S. beans,” she said.

INTL FCStone cut its estimate of Brazil’s soybean crop by about 4 million tonnes to 116.25 million tonnes due to a drought affecting some areas.

Grains prices at 0227 GMT
 Contract    Last    Change  Pct chg  Two-day chg  MA 30   RSI
 CBOT wheat  522.25  4.50    +0.87%   +1.02%       518.63  63
 CBOT corn   381.50  1.50    +0.39%   -0.39%       379.38  60
 CBOT soy    921.75  3.25    +0.35%   +0.03%       910.36  63
 CBOT rice   10.69   -$0.06  -0.51%   +2.00%       $10.67  63
 WTI crude   50.53   $0.75   +1.51%   +4.14%       $49.14  
 Currencies                                                
 Euro/dlr    $1.145  $0.006  +0.54%   +0.54%               
 USD/AUD     0.7157  0.004   +0.63%   +2.17%

Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight RSI 14, exponential

Source: Reuters (Reporting by Naveen Thukral Editing by Joseph Radford)

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