Chinese bean purchases and USDA data dump spark markets

Confirmation of 15-18 MBU of Chinese bean purchases from the Pacific Northwest ports and the continued USDA data dump that included multiple flash sale announcements from the initial weeks of the government shutdown helped rally beans sharply to erase all of last Friday’s USDA report losses. Wheat had its biggest daily gains on increased Russian bombing of key export infrastructure in Ukraine while corn followed both with only modest enthusiasm. Other bean demand news was positive as October posted the highest monthly crush total on record using 227.6 MBU of beans with two new crush facilities working at full capacity to push to the new monthly total.

News and Notes:

• The US warms up heading into the Thanksgiving holiday next week while the only problem in Brazil and N Argentina is a little too much rain. Their monsoon season has not disappointed.
• The daily January bean chart is on Page 2 and shows today’s impressive rebound from double-digit overnight losses to recoup all of Friday’s losses and make a new breakout high and new 17-month highs. The DOJI, higher highs and lower lows than the previous day of trade with a higher close is normally a very bullish signal. The computer models and technical traders have their teeth in the bean rally and do not want to let go just yet. Today’s 46-cent range would usually be reserved for report days or weather events, but the Chinese cash business is the current catalyst.
• China is particularly good at picking their opportunities when they have tot make public world purchases of ag products. Friday’s steep USDA report losses gave them the chance they were looking for. China does not have a history of chasing rallies, so additional sales announcements this week would be a great surprise.
• The frustration for bullish wheat trader’s since Russia invaded Ukraine over 2 ½ years ago was that the thought of decreased export capacity would rally prices. Since the all-time high in the first week of March 2023, prices have fallen $8.83 from top ($13.63 ½) to bottom ($4.92 ¼) just last month. While today’s news of heightened attacks on key infrastructure rallied the market, it does not tighten the world balance sheet with Russia flooding the world market with plenty of cheap wheat to finance the war. Catch up on sales after the 66-cent rally over the past five trading sessions.

All rallies are good rallies because there are always two or three seasons of crops to sell, there are always bushels that can be sold. No two rallies are ever the same and this one falls into its own category because my search for post trade war with a government shutdown kicker did not yield any results. Today’s exuberance seems way overdone as 7-10 cargoes of small normal sales to China does not make much of a dent in the promise of 350-400 MBU of Chinese purchases that have now been moved back to April or later from “by year end” by Sec Bessent. Excellent growing conditions and acreage expansion in Brazil have to have their influence at some point, because Argentina and Brazil are barreling toward an 8 BBU plus bean crop where the extra production over last year will overwhelm the small sales China made today. Continue to sell rallies and call us if you want to talk about some re-ownership strategies on earlier or upcoming sales.