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January 17, 2020 | MarketWatch

Why US-China Trade Deal Failed Soy, Wheat and Corn

Wheat prices have climbed year to date for reasons all their own

The US grain market did not see much of a reaction after Washington and Beijing made phase one of their trade agreement official this week, and it will take time before commodities such as soybeans, wheat and corn benefit from China’s pledge to buy more agricultural products, reports MarketWatch.

Concerns over reduced production from Australia, Russia and the former Soviet Union countries due to weather concerns, as well as US farmers intending to plant the lowest total number of wheat acres since record keeping began, has led to higher wheat prices.

Caroline Bain, chief commodities economist at Capital Economics, believes the muted response may be attributed to the fact that “the good news was already priced in,” as well as the possibility that “China’s promises to buy huge quantities of US energy and agricultural commodities not only look implausibly ambitious, but may also have a negative impact on global prices.”

MarketWatch also reports that the replenishing of Chinese soybean inventories will create a one-time temporary demand surge for US soybeans in 2020.

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