GRAINS-U.S. soybean futures set highest price since June 2018 on China trade hopes

Tom Polansek

hopes@ (Updates with U.S. trading, changes byline/dateline, previous PARIS/SHANGHAI)

CHICAGO, Dec 30 (Reuters) - U.S. soybean futures on Monday rose to their highest price since June 2018 on expectations that Washington and Beijing will soon sign an initial trade deal that will increase American agricultural exports.

China agreed to import more U.S. farm goods under the Phase 1 deal struck this month, providing support for farm markets. Chinese Vice Premier Liu He will visit Washington this week to sign the agreement, the South China Morning Post reported.

China separately approved two new genetically modified crops for import that could boost agricultural purchases from the United States, the agriculture ministry said.

Traders and farmers hope increased Chinese demand will reduce inventories of U.S. crops that built up during the trade war. China is the world's biggest soybean importer and shifted purchases to South America from the United States because of the dispute. Details have not been announced about what farm goods China will buy under the deal or when the purchases will occur.

"We don't know the details of the Phase 1 deal, and that's a little bit concerning," said Karl Setzer, commodity risk analyst for AgriVisor.

Most-active soybeans futures on the Chicago Board of Trade were up 10 cents at $9.51-1/2 a bushel by 12:10 p.m. CST (1810 GMT). They reached the highest price for a most-active contract since June 13, 2018.

CBOT wheat futures pulled back after reaching their highest price since August 2018. The most-active contract was down 1-3/4 cents at $5.54-1/2.

Corn was down 2 cents at $3.88 a bushel, after touching its highest price since Oct. 22, 2019.

Volumes were light and traders were adjusting positions before the end of the year.

Concerns about unfavorable crop weather reducing harvests in rival wheat exporters like Russia, Ukraine and Australia helped support wheat futures, traders said. Export prices in Russia, the world's biggest wheat supplier, rose for a seventh straight week last week.

A rally near three-year highs in Malaysian palm oil futures also lent support to wider oilseed markets, including soybeans. (Reporting by Tom Polansek in Chicago. Additional reporting by Gus Trompiz in Paris and Emily Chow in Shanghai; Editing by Jason Neely and Jonathan Oatis)