COFCO Expects Increased Soybean Purchases
- Speaking at a conference, an executive at China’s state-owned ag trading house COFCO stated it’s likely to speed up the buying of US farm goods.
- Exporters confirmed Wednesday that China secured another 396,000 tons of US soybeans, split evenly between old and new crop delivery.
- COFCO expects China's soybean imports in 2019/20 at 87.50 million tonnes, including 63.7 million from Brazil and 13.70 million from the US.
- Chinese importers will struggle to deal with lower crush margins after working through record Brazilian shipments from May through September.
FBN’s Take On What It Means: Old crop purchases have been lagging as noted by the cut in projected exports by the USDA in Tuesday’s report. The US will have an open export window from September into January before the next Brazilian harvest, and record exports to China are already part of estimates for the new crop balance sheet. The challenge will be whether China can exceed those expectations as they fulfill the purchase obligations set forth in the Phase 1 trade agreement.
Weather Forecasts through Month End Conducive to Good Conditions
- Warming temperatures are in the forecast, with highs across the Plains and Midwest to reach into the mid-70s.
- The outlook contains two rounds of moderate to heavy rain across the Corn Belt over the next two weeks.
- Dryness in southwestern parts of HRW areas may be partially relieved by sporadic showers the remainder of this week, with more rain expected.
- Drying in the southeastern states will soon become an issue for late planted crops and rain will be needed in another week.
FBN’s Take On What It Means: US crop weather is expected to be mostly favorable over the next two weeks, although rain will fall Thursday through the weekend and again after several warm and dry days next week. The mix should prove favorable for fieldwork and crop development. Without the threat of a major production problem, rallies in the grain markets will likely tend to be shallow and short-lived.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)
