This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain markets have trended lower this week heading into the high-stakes meeting between Trump and Xi. Administration officials through the summer have tried to build up expectations for the meeting, hinting at big deliverables. They have said the Chinese agreed to buy 25 million metric tons of soybeans and $17 billion of other agricultural products. Without specifics about what those other agricultural products are, the market does not know what to price in. The U.S. side has incentives to try to get all the details they can to tout their progress going into midterms. The Chinese incentive is to remain as vague as possible so they can choose to buy what they need to import anyway or fall short on the target. Treasury Secretary Scott Bessent said this week that “there are some deliverables that have not been perfect on the Chinese side.” While China has been “very good thus far” in meeting its commitment on the soybeans, Bessent says “they’re a little behind schedule” on the other ag purchases. Earlier this week, U.S. Trade Representative Jamieson Greer said their purchases of other ag products have reached $4 billion. The U.S. administration communicated there would be an extension to the existing trade truce with China until January, which some interpreted as a sign there would not be any major changes resulting from this meeting this week. We saw some more soybean sales announced this week, but they were not particularly noteworthy. There has been nothing so far to get the funds excited. The last few U.S.-Chinese meetings resulted in a pretty unremarkable joint statement, then followed by pronouncements leaking from the U.S. side of major ag purchases and then little to no confirmation by the Chinese side. We should not be surprised to see that same pattern hold this time.
The rest of the world remains in the various levels of chaos we have now grown accustomed to. There are a lot of headlines about progress being made toward peace in the various conflicts without many outward signs of that progress. It could be real progress happening behind the scenes or just headlines to try to calm markets ahead of the midterms. Only time will tell.
There is some positioning ahead of USDA Stocks Report, which comes out next Wednesday, Sept. 30, at noon. It will give us the last count of old-crop stocks before going into the new crop. Weather has slowed harvest in the Midwest, and it is starting to fall a little behind average pace. The forecast shows a window to open up next week, but we will see. Early planting is starting in South America as well. There is nothing to get excited about down there yet either.