Soybeans were poised to post their biggest daily contractual gain on Thursday on hopes that a four-month trade war between the two wealthiest nations could be near an end.
Soybeans rose 4% in a matter of minutes to hit a high of $8.73/bu after President Trump said he had made good progress in resolving a trade dispute with President Xi of China.
“Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea,” he tweeted.
In response, state media quoted President Xi as saying that “both sides should push for trade solution that is mutually acceptable.”
The announcement gave hope that any trade resolution later this month would result in China dropping its additional 25% import tariff on soybeans bought from the US.
“After Trump’s tweet the board is up and the basis is going to be down today,” said one Brazil-based market source, although a US source said that offers from the US Gulf remained unchanged.
China slapped the import tax on US beans on July 6 and since then Chinese crushers have been avoiding buying US beans, which normally supply 35-40% of Chinese international demand.
Prior to the news analysts had speculated that soybeans could surge 15% or $1.30/bu if the trade war was resolved.
