By Benjamin Parkin

Crop prices rose on Friday as Chinese soybean buyers returned to U.S. markets.

The U.S. Department of Agriculture said that private exporters reported sales of 312,000 metric tons of soybeans to China for 2018-19, along with a further 165,000 tons from a country of optional origin.

Export business with China slowed when the country threatened to slap retaliatory tariffs on American crops. After an apparent detente between the two countries this week, Washington signaled that Beijing would agree to import more U.S. agricultural products. China is the largest buyer of U.S. soybeans.

Soybean futures for July delivery rose 0.6%, to $10.41 1/2 a bushel, at the Chicago Board of Trade, with July contracts for corn--which some traders also expect to see China buy more of--rising 0.4%, to $4.06 a bushel.

Wheat futures made the biggest gains, however, as bad growing conditions around the world continued to spark bets that supply would tighten next year. Producers in the Southern U.S. and Black Sea region have both struggled with dry conditions, which are expected to translate into smaller crops.

July wheat contracts rose 2.4%, to $5.43 a bushel.

Traders also had one eye on political developments in Argentina, where media reports said that the government was looking to stop lowering a tax on soybean exports. The tax, currently at 27.5%, was being cut by half a percentage point every month through the end of 2019, according to Reuters.

Argentine soybean farmers, among the U.S.'s main competitors, said the move will further hurt a sector which already suffered through a severe drought this season.

Analysts say that the immediate impact on exports could be limited, however, as the bad conditions left the country without much of a surplus to sell. The USDA put the country's most recent soybean harvest at 33 million metric tons. But it could have longer-term consequences.

"This could also have a negative effect on next year's crop, as their fraught financial situation could mean that farmers are not able to buy so many seeds, fertilisers and pesticides," wrote Commerzbank in a note.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

May 25, 2018 15:50 ET (19:50 GMT)

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