Crush margins, trade talk prospects help soybeans recover

A 9% jump in soybean crush margins and the prospect of trade talks between the US and China has helped soybean futures contracts rebound from a near two-month low, source said late Wednesday and early Thursday.

According to data from consultants Strategie Grains, crush margins rose from $88.62/mt on Tuesday to $96.34/mt on Wednesday as soybean futures for May fell to their lowest level since February 6.

Spot cash margins at four out of five main global crushing locations showed a week-on-week rise, according to date from Futures International, with margins in Sidney, Ohio reaching $1.97/bu, the second highest level in more than a year.

"Crush sure helped the board today," said one trader late on Wednesday, adding that it was a "pretty good spike" and that crushers should be "smiling at those margins".

Futures rebounded in Thursday morning trade, bouncing back 4% from its Wednesday low to $10.21/bu at time of writing.

The rebound is also in the context of a wider bounce in equities and other risk-on products, which has been put down to growing confidence that tariffs can be avoided when China and the US meet.

Late Wednesday, President Trump’s economic adviser Larry Kudlow told journalists that China’s decision to tax soybeans and 106 other products including planes and cars but refrain from setting a date was "just a proposal", comments that gave hope the US farmers that tariffs can be avoided.

In a daily note to clients, CHS Hedging on Thursday said: "trade talk during the day Wednesday speculated that the US and China are already behind closed doors, negotiating, to avoid the implementation of any tariffs".

President Trump’s decision to tax $50 billion worth of Chinese goods, which China said it would retaliate by taxing imports of 106 products, is out for consultation for 60 days.