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Chinese exports taking focus as 2020 closes

Chinese exports taking focus as 2020 closes

Beans and corn quad graphic

As 2020 wraps up, demand is the key that will keep the grain markets moving this winter, particularly with international purchases.

In the most recent export sales report, released Dec. 17, results were “not so great” in the soybean market, coming in at 1 million metric tons, John Payne of Daniels Trading said.

“There were some new net sales announced for China next year, but we’ve slowed down in weekly purchases,” Payne said. “Where we were seeing 1.5 to 2 million metric tons, we are seeing 500,000-600,000 metric tons.”

Payne said the corn and wheat exports were still encouraging, coming in at 1.9 million and 561,000 metric tons.

“U.S. ag goods continue to be really solid when it comes to the markets,” Payne said.

On Dec. 15, Bloomberg reported Brazil was close to an agreement that would allow the South American country to increase sales to China, which could cut into the U.S. demand. The move by China is being made to increase feed supplies as their hog herds increase, the report said.

Payne, however, said he doesn’t believe this indicates the Chinese will abandon the U.S. market, which has maintained steady business with China throughout 2020.

“This kind of deal does not indicate China holds the amount of corn in storage they say they do,” Payne said. “Besides, Brazil doesn’t have a tremendous amount of carryover to play around with. I expect China to continue to be in the U.S. market into next year.”

With a COVID-19 stimulus package expected to come down the pipeline around the Christmas holiday, Payne said that bodes more bullish behavior. The goal of the stimulus is to keep markets stable, he said, which includes the agriculture markets.

“Anything that looks like it will be in demand will really be speculated on,” Payne said, referencing soybeans and soybean oil. “That’s a good place to be for commodity futures.”

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