Renewed optimism about U.S. China trade talks lifts grains

* Investors warm to report of progress in U.S.-China talks

* Sentiment tempered by lack of new Chinese buying

* Profit-taking clips gains in wheat (Adds closing prices, weekly trends)

By Karl Plume

CHICAGO, Jan 18 (Reuters) - U.S. corn and soybean futures rose for a third straight session on Friday in a broad commodities and equities market rally sparked by renewed optimism about U.S.-China trade talks.

Wheat edged upward along with corn and soy, but shed gains late in the day as traders pocketed profits fueled by media reports highlighting potential progress in U.S.-China trade negotiations.

Rumors of large scale U.S. grain purchases by China riled markets this week, but official confirmation of such deals has not been available due to the partial U.S. government shutdown that has shuttered numerous divisions of the U.S. Department of Agriculture.

"The commodity markets are starting to gear up for the idea that China's going to open up," said Mike Zuzolo, president of Global Commodity Analytics. "The trade is really gearing up for the idea that these rumors are going to materialize."

Chicago Board of Trade (CBOT) March soybeans ended up 9 cents at $9.16-3/4 a bushel, March corn gained 1-3/4 cents to $3.81-3/4 a bushel and CBOT March wheat ended unchanged at $5.17-3/4 a bushel.

Corn and soybeans both made advances for the second week in six, rising 0.9 and 0.7 percent respectively. Wheat shed 0.3 percent, the first weekly drop in three weeks.

Bloomberg reported on Friday that China offered to go on a six-year buying spree to ramp up imports from the United States in an effort to cut its trade imbalance.

The report came a day after the Wall Street Journal said U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30. A Treasury spokesman working with the administration's trade team denied the report.

Gains in grains have been modest, however, as traders remained cautious in the absence of confirmed Chinese purchases and signs that the negotiating parties are following through on their trade proposals.

Soybean and corn markets weighed harvest prospects in South America, where adverse weather has dented yield prospects.

Wheat traders eyed a threatening winter storm traversing the central United States on Friday and forecasts for harsh cold in the system's wake.

Heavy snowfall expected from the storm should help insulate dormant winter wheat from the cold air. But the snow is likely to miss portions of the Plains and Midwest, leaving some areas vulnerable to crop-damaging weather.

(Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; editing by Sherry Jacob-Phillips, Tom Brown and Richard Chang)

First Published: 2019-01-18 03:44:49
Updated 2019-01-18 22:48:47

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