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September 23, 2020 | FBN Insights | Kevin McNew

Chinese Buying Continues

China’s record buying pace has helped support recent surge in grain prices

Export Sales Announcement

  • Export sales of 132,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year.
  • Export sales of 126,000 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

China Buying Continues

  • It’s setting up to be another big week of USDA sales announcements as exporters continue to report daily sales of corn and beans.
  • As of Tuesday, there have been reports of 833k tonnes (30.6 million bushels) of soybeans to China and unknown destinations. 
  • Exporters have reported the sales of 140k tonnes of corn to China and another 320k tonnes to unknown destinations.
  • China now has at least 19.0 million tonnes of US soybeans officially on the books.
  • China likely accounts for 35%-50% of the “unknown” sales of 10.5 million tonnes.
  • China’s implied US imports of 22-24 million tonnes are on pace to make a new record above the 36.1 million taken in 2016/17. 

FBN’s Take On What It Means: China’s record buying pace has helped support the recent surge in grain prices and the question is how much more can be expected. US beans are the most competitive until the South American harvest ramps up in February and China has already started booking cargoes from Brazil. On the corn front, China’s domestic prices are record high going into their harvest which has been affected by three typhoons, which may lead to further imports beyond current quotas. 

Egypt Buys Russian Wheat

  • Egypt tendered for an unspecified amount of wheat for Nov 21-30 shipment.
  • They bought 405k tonnes of Russian wheat at an average price of $256.48, up $7 from their purchase last week.
  • The seven lowest offers were all Russian while French and Ukrainian origins were also included.
  • Egypt also reported that, with this recent purchase, they now have 7 months of strategic reserves compared to 4 months supply last year at this time.

FBN’s Take On What It Means: The French offers were a little surprising given the cut in production this season. Unfortunately there was no US wheat offered in the tender, and the recent surge in prices has kept the US uncompetitive, especially given the freight cost differential. US wheat prices will likely continue to follow world values and keep the US out of North African business. 

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