This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
The soybean market had some very big volumes last week after Trump’s tweet. He said that the Chinese were considering buying another 8 mmt of old crop U.S. soybeans. I think the Chinese did not know they were considering buying more soybeans until Trump told them they were. The reality is that we do not have that many more beans on the balance sheet to sell to China. They bought the first 12 mmt of U.S. beans at a higher price than what they could have bought Brazilian beans for, and now, with the Brazilian harvest underway, that spread has widened out even more. If they do indeed continue to buy U.S. beans, it will be at a much higher price and will be clearly for political reasons. One reason the market reacted so strongly to the tweet was that, toward the end of the week, there were rumors in the cash market that the Chinese were inquiring about buying more beans. Then, on Monday, we did see a flash sale of soybeans to China. There is some question about whether this is just part of the 12 mmt we believe they had previously bought, or a new sale above that, acquiescing to Trump’s tweet from last week.
Soybeans rallied more than 80 cents on the news, giving good pricing opportunities for anyone who still had old crop beans left to sell, and new crop did not follow as dramatically. Unfortunately, there are not as many old crop beans to sell in the U.S. as there are in Brazil. The real beneficiaries of Trump’s news were Brazilian farmers, not the U.S.
Monday, the grain markets were back to low volume and small ranges. Today, Tuesday, Feb. 10, USDA will release its updated supply and demand figures at noon. The February report is typically not a big market mover, as there are no changes made to the U.S. crop size, and we have not made it far enough into the marketing year for big changes in demand, although corn exports do continue to impress. There may be some changes to the South American crop sizes, but the last few years USDA has taken a wait-and-see approach to South American estimates. The big market-moving USDA announcements will be the USDA Outlook Conference Feb. 19-20 and the Prospective Plantings report on March 31. From the Outlook Conference, we will get USDA’s trend estimates of yield and their economists’ estimates of acreage allocation. The first real glimpse of acres that come from actual farmer surveys will be on the March 31 Prospective Plantings report.
Look for markets to continue trading sideways in narrow ranges until or unless Trump tweets something dramatic, or we get some unexpected news from somewhere else. Brazilian bean harvest continues to advance, and second-crop corn planting continues, with no major weather issues so far.