This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
We went home over the weekend with just about everyone disappointed after the conclusion of Trump’s visit to China. The market had high hopes that we would see a detailed, comprehensive trade deal that included specific amounts on commodities and other products that would be purchased. When Secretary Bessent seemed to throw cold water on additional soybean purchases and there were no details of other ag purchases, the funds started bailing. Then the market hit technical levels and the selling accelerated. It continued on Friday, making the charts very bearish. Even Jamieson Greer’s continued insistence on Friday that the Chinese had agreed to buy “double-digit billions” worth of U.S. farm goods did little to slow the selling.
Then on Monday, the White House released a fact sheet that said that in addition to the soybeans, “China has agreed to purchase at least $17 billion of agricultural products from the U.S. annually through 2028.” They also announced the creation of a joint U.S./China trade body called a Board of Trade that would oversee trade issues in sectors including aviation, energy, medical equipment and agriculture. The framework would seek tariff reductions on more than $30 billion worth of goods. The market needed details, and now some details have emerged, so Monday saw the return of the funds on the buy side. Never mind there was no confirmation from the Chinese side of these agreements, or that they had made some pretty lofty but vague commitments to buy $200 million in goods in 2020 that they never came close to fulfilling. We at least got some details, and part of the reason the market is so willing to give the benefit of the doubt is because of the October handshake agreement with China. There was never any confirmation of the agreement to buy the old-crop soybeans or the 25 mmt of new crop in October, yet the Chinese did step up and buy close to the 12 mmt target. They still have never confirmed that agreement. Monday’s trade may be more of an admission that we were overdone to the downside last week. The whipsaw trade is enough to give anyone whiplash, and the volatility will likely continue as there are so many geopolitical risks.
After the close on Monday, Trump tweeted that he had temporarily paused the attack on Iran he had ordered for Tuesday at the urging of several Arab countries because they felt we were very close to a deal. It was believed Trump was hesitant to initiate a major offensive ahead of or during his trip to China. In the latest tweet, Trump said if there is not a deal, he will instruct the Defense Department to move ahead with the strikes. So we may be close to a deal, or Trump may be bluffing once again to try to push the Iranians along. Either way, there may be a reaction from the market depending on how it goes.
Monday afternoon, USDA released the weekly crop progress report. They estimated corn planting at 76% complete, 1 point ahead of market expectations. That compares to 57% complete last week, 76% last year and a five-year average of 70%. Soybean planting was estimated at 67%, which is also 1 point ahead of market expectations. That compares to 49% last week, 63% last year and a five-year average of 53%. All spring crops are being planted ahead of the five-year average. The winter wheat crop is rated at 27% good/excellent. That is a 1-point decline from last week and is 25 points lower than last year. It is the lowest-rated crop since 1989.