The meeting between Trump and Xi in South Korea early this morning (Dutch time) has not gone unnoticed in the grain market. Trump himself presented it as a great success, but aside from a reduction in import duties on Chinese products, little concrete information is known yet. China has reportedly pledged to buy American soybeans and other agricultural products.
The December wheat contract on the Matif closed yesterday down €0,25 at €192 per tonne. Wheat traded slightly higher on the CBoT. The December contract on the Chicago exchange closed 3¼ cents higher at $5.32¼ per bushel. Corn was also in the green, closing 2 cents higher at $4.34 per bushel. Soybeans also rose 2 cents to $10.80¼ per bushel.
Finally, the time had come: US President Trump and Chinese President Xi met in South Korea. A reduction in the US import tariff on Chinese products from 57% to 47% was one of the most tangible outcomes of the summit. According to Trump, China has pledged to purchase large quantities of soy and other agricultural products from the US. Trump called this a "nice gesture from China," according to journalists present.
The beginning is here
Just before the meeting between the two world leaders, Reuters reported that the Chinese state-owned company Cofco had purchased three shipments of soybeans from the US. According to the news agency, this amounts to a total of 180.000 tons of soybeans, which are scheduled for delivery to the buyer in December or January. Analysts are calling the purchase primarily a gesture of goodwill. This volume makes little difference to American soybean growers. To put it in perspective, Brazilian soybean exports for October are estimated at 7 million tons, compared to 4,4 million tons last October. The vast majority of Brazilian soybeans are destined for China.
Due to tensions between the US and China, the latter has hardly purchased any soybeans from the US. October through January are the most important months for US soybean exports to China. This is when the new US harvest is available, and there is no new harvest from South America. Starting in February, new soybeans from countries such as Argentina and Brazil become available.
EU less involved in the market
The EU exported 6,2 million tons of wheat during the current season, up to and including October 26th, according to new figures from the European Commission. This means wheat exports are 21% behind last season. Barley exports, at 2,6 million tons, are 58% ahead of last season. The EU imported 27% less corn. So far this season, the total imported corn stands at 5 million tons. Europe also imported less soybean and soybean meal. This season, 4,3 million tons of soybeans were imported, compared to 5,7 million tons during the same period last season. Soybean meal imports are 5,7 million tons, approximately 200.000 less than last season.
LSEG has raised its Australian wheat harvest forecast by 2% to 34,8 million tons. This brings LSEG close to the USDA's latest forecast, which in the September Wasde report anticipated an Australian wheat harvest of 35 million tons. In the major wheat-growing regions, wheat is in average or above-average condition, according to satellite vegetation measurements taken by LSEG.