- Chicago grain markets are mixed at midsession with soybeans slightly higher and the grains sagging on renewed worry over China demand. There are strong rumours that China has booked 8-12 cargoes of French wheat today. The buying is likely based on someone executing TRQ import licenses and securing the cheapest wheat in the world, French. We have no way of knowing whether China will be using the wheat for milling or feed purposes. Several connected cash traders suggest that China will feed the wheat to its sow population. US wheat futures are lower as the US may have missed the Chinese business. We note that this demand is under TRQ, and not part of the US/China Phase One deal. The TRQ wheat buying has some wondering if corn could be next.
- US Gulf corn is the cheapest in the world through March. The questions that commercials are asking is whether China will be securing TRQ corn. There are rumours that China has been booking Ukraine corn, but this may be under a loan agreement that goes back many years. We expect that any corn that China secures from Ukraine will be counted against their annual TRQ commitment.
- US export sales for the week ending January 30 were; 12.4 million bu of wheat, 49.1 million bu of corn, and 25.9 million bu of soybeans. The soybean and corn sales were on the top end of trade expectations. US wheat export demand is seasonally softening.
- For their respective crop years to date, the US has sold 781 million bu of wheat (up 123 million or 19%), 897 million bu of corn (down 374 million or 29%) and 1,187 million bu of soybeans (up 71 million or 6%). Excluding Mexico, the US corns sales pace is the second slowest on record as of February 1.
- Chicago brokers estimate that funds have sold 3,800 contracts of corn and 2,200 contracts of wheat, while buying 1,200 contracts of soybeans. In soy products, funds have sold 2,700 soyoil while buying 900 soymeal.
- Hog futures are limit up on a report from Tyson that suggests that China demand for US pork will be soaring, up 600%. The news caught the hog market at a discount to cash in the nearby futures on China’s coronavirus. US pork is the cheapest in the world with the Phase One Deal offering the sales opportunity
- The midday GFS weather forecast is wetter for Northern and Central Brazil with rain totals of 5-9.00″. Such rains are greater than the overnight forecast, which will cause the harvest to come to a crawl. The 11-15 day forecast maintains the wet trend into February 22. The forecast also offers needed rain for Argentina and crop prospects here are brightening. The wet Brazilian weather forecast should be monitored, but it is unlikely to become a market factor until the last half of February.
- Chicago values are mixed as traders understand that it is the February 21 WASDE Outlook Forum balance sheets, not Tuesday’s February Report that will best reflect China demand under the Phase One deal. Thus, unless China shows up as a buyer of US grain or soybeans, the overall Chicago price trends are expected to be choppy. We maintain a view of waiting for China demand.