This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
With the nature of commodity markets, things can become obsolete before they are even published at any time. Never more so than this week with the high-stakes meetings in Beijing. The final meetings are scheduled for Friday morning local time, then there will be a joint statement, hopefully, and Trump will leave. Beijing is 12 hours ahead of us, so all of this will happen over our Thursday night. When we wake up Friday morning, the whole visit will be concluded and Trump and the others will be well on their way back home.
The first round of festivities took place while we were sleeping Wednesday night, and the commodity markets did not react favorably. There has been a lot of fund length added into commodities over the last few weeks, and part of the impetus of that was the hope for even more Chinese purchases of U.S. soybeans and other ag commodities. During the first round of meetings, there was nothing specific released about ag commodities. In fact, there were very few details at all, which suggests that negotiations for a trade agreement were not as far along ahead of the trip as many had hoped and believed. Through the day on Thursday, there were details leaking out of some specific aspects but nothing about more Chinese purchases of agricultural commodities. In fact, Treasury Secretary Bessent seemed to be trying to dial back expectations when he said Chinese soybean purchases were “all taken care of.” The market took this to mean there would not be any additional purchases of soybeans. Then the funds started selling beans, and the weakness spilled over into everything. We saw a downside reversal similar to last week when the market thought the war in Iran was over.
I am recording this on Thursday afternoon after the bean market closed down 24 cents on the November contract and corn closed down 11 cents on the December. When you are listening to this on Friday morning after the final meetings in Beijing have concluded, everything could be different. U.S. Trade Representative Jamieson Greer has been saying for weeks the administration was pushing the Chinese to buy other ag commodities in addition to the soybeans. Maybe there was an announcement Friday night of corn or cotton purchases, and the money flow turns around and starts coming back into commodities. Or maybe there is no mention of ag again for the rest of the trip.
Keep in mind, after the first meeting between Trump and Xi last October, the market was disappointed for weeks that the Chinese side never confirmed the soybean purchase commitments the U.S. side said they agreed to. But then, all without confirming they had, the Chinese bought close to the amount of old crop the U.S. side said they would. Within that handshake agreement was also a commitment to buy 25 million metric tons of new-crop soybeans in addition to the old crop that they have already bought. If they meet that or even attempt to meet that target, U.S. bean carryout will be much tighter than what is currently projected. So I am pointing out all the unknowns to say that this is the first reaction to the first day of the meeting, but it may not be the long-term direction of the market after the visit and talks have concluded.
The market is giving us yet another reminder to get targets and work orders. Your cash grain buyer is probably not going to answer if you try to call in the middle of the night to get something priced.