LONDON, May 21 (Reuters): Chicago grain and oilseed prices were higher on Monday after Washington and Beijing agreed to drop tariff threats, easing fears about demand for U.S. shipments to China.
Dealers said gains were tempered by a strong dollar with the U.S currency climbing to a five-month high.
The U.S. trade war with China is "on hold" after the world's largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said on Sunday.
"Such a truce is likely to alleviate concerns over the U.S. grains exports to China in the short term," ING said in a market update, adding that the news had contributed to a rise in soybean prices on Monday.
The most-active Chicago Board of Trade soybean contract was up 1.7 per cent at $10.15 a bushel at 0951 GMT.
In April, China proposed a 25 per cent tariff on U.S. soybeans as part of its response to Washington's plans to impose tariffs on a range of Chinese products.
But the upside in U.S. soybean prices is limited.
"Easing of trade war tensions between the US and China are supporting agricultural markets," said Phin Ziebell, agribusiness economist at National Australia Bank. "However, Brazilian soybeans are getting competitive and they have a record crop to sell, so the upside for US beans is limited."
Orders for nearly one million tonnes of U.S. soybean exports were cancelled last week, according to U.S. government data released on Friday, as cheap supplies from Brazil made U.S. cargoes less attractive to buyers.
CBOT corn climbed 0.8 per cent to $4.05-3/4 a bushel and CBOT wheat rose 0.5 per cent to $5.21-1/4 a bushel. Earlier in the session, both markets climbed to their highest since May 04.
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