- US exporters report that any purchase orders they are holding are from private importing or crush firms. Traders and farmers are looking for a formal announcement of retaliation from the Chinese Government to help clarify the situation on Sinograin/COFCO. The US government has been silent on the issue. Chicago soybean values initially rose on the hope that the newswires have it wrong and that China is securing US soybeans as needed.
- China is bidding for additional Brazilian soybeans and appear to be willing to pay premiums above the US Gulf on a landed basis. Those price premiums amount to $0.34-0.39/bu including freight costs. The buyers want assurances of supply in a time of high and rising political tensions between the US/China. Chinese crushers are willing to exhaust Brazilian soybean supplies.
- As China bids up/snaps up Brazilian and Argentine soybeans, S American fob/CIF offers continue to rise. Some S American sellers argue that their premiums could reach a point where non-Chinese sales could be shifted to the US or cancelled. China needs soybeans in October-December, it won’t be able to totally rely on S America until their next new crop in late January.
- Chicago traders are uncertain as to the retaliation intentions of China. If the US/China Phase One deal breaks up, tariffs would return, and Chicago prices would engage in a more bearish price profile. If China continues to secure US soybeans, Chicago prices will be supported until seasonal price trends turn lower around June 10-12. Uncertainty is never a friend of a trader.
- US export inspections for the week ending May 28 were; 44.4 million bu of corn, 14.5 million bu of soybeans, and 18.4 million bu of wheat. The sales were in line with trade expectations.
- For their respective crop years to date, the US has exported 1,121 million bu of corn (down 427 million or 27%), 1,300 million bu of US soybeans (up 43 million or 3%), and 914 million bu of wheat, up 3 million or equal to a year ago. Research maintains that US 2019/20 soybeans are overstated by 75-150 million bu. China has full coverage of their import demand through mid-August. And WASDE is likely overstating US 2019/20 corn exports by 15-30 million bu based on export pace analysis to date.
- Chicago traders estimate that funds have bought 5-6,000 contracts of corn and 3,600 contracts of soybeans since the reopening. Funds are sellers of 2,800 contracts of wheat, while buying 2,900 contracts of soymeal and 3,100 contracts of soyoil. Funds were active sellers of ion Chicago overnight.
- The forecast shows no sign of a blocking high pressure ridge in the next 2 weeks. Tropical activity will be developing in the Gulf which will trim the flow of humidity heading north into the Central US. After today, warm weather follows with Midwest temperatures in the 80′s to 90 while Plains temperatures reach into the 90′s to lower 100′s. The ridging breaks down around June 10 with near to below normal temperatures and improved rain chances.
- Uncertainty on China demand prevails with traders not wanting to go home long if a retaliation announcement is made overnight by China that includes US Farm Goods. Our hope is that it doesn’t. That said, US weather forecasts are favourable and Midwest corn/ soy conditions are expected to rise in the coming weeks.