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China pokes around US wheat · Professional Ag Marketing Podcast

• 0:03
  SPEAKER_00: You're locked in to the Green Market Talk Podcast.
• 0:06
  SPEAKER_00: Fast updates, market movers, and the green news you need right now.
• 0:11
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss, but it's not suitable for all investors.
• 0:21
  SPEAKER_01: Today is October 30th.
• 0:23
  SPEAKER_01: I've got Jaden back with us here today.
• 0:25
  SPEAKER_01: How's it going, Jaden?
• 0:26
  SPEAKER_01: It's going good, Mike.
• 0:27
  SPEAKER_01: How about yourself?
• 0:28
  SPEAKER_01: Real good.
• 0:29
  SPEAKER_01: We're going to talk about the grain market here today just to set us up.
• 0:32
  SPEAKER_01: Uh, we've had a big week in these grain markets, yet again, mainly pressured uh with a little bit of weakness here.
• 0:39
  SPEAKER_01: We've had a combination of Brazilian uh currency news, South American crop expectations going up.
• 0:45
  SPEAKER_01: We've had uh money coming out of these markets broadly, whether it be the equities, uh currencies, etc., ahead of the midterms is next week.
• 0:54
  SPEAKER_01: So I I just a setup here to start off with.
• 0:58
  SPEAKER_01: But there have been a few key things, I think, this week that's worth talking about in this grain market.
• 1:03
  SPEAKER_01: And where I wanted to start was kind of where the week started off with.
• 1:07
  SPEAKER_01: Let's talk about the Brazil election and the soybean sell-off.
• 1:10
  SPEAKER_02: Yeah, Mike.
• 1:11
  SPEAKER_02: So started off the week under some pressure there, watching the Sunday night open.
• 1:15
  SPEAKER_02: Was a little surprised there, soybeans down sharply, down about 20 cents.
• 1:19
  SPEAKER_02: Uh, and then saw some news wires hit um hit out there.
• 1:22
  SPEAKER_02: So what kind of happened there was we had a Brazil election there, and President Lula, I believe his name is, um, actually won the election there.
• 1:31
  SPEAKER_02: And uh just about a month ago, there's about an 80% chance of him actually losing.
• 1:36
  SPEAKER_02: So uh the result of this, the currency, the Brazilian reel, fell sharply there.
• 1:41
  SPEAKER_02: Um, and that made, you know, Brazilian beans just more cheaper, and saw uh the U.S.
• 1:46
  SPEAKER_02: soybean prices there really, really fall out of bed there.
• 1:49
  SPEAKER_01: The liberal president incumbent, uh a little bit less fiscally responsible, led to a currency sell-off there, and that hit these soybean markets pretty hard throughout the week and helped lead to that.
• 2:01
  SPEAKER_01: Uh you know, overall, I I still think China is still a key part of the soybean market, but really we haven't seen them back off, really, have we?
• 2:11
  SPEAKER_02: No, Mike saw some more flash sales today, two unknown destinations, but more than likely China.
• 2:17
  SPEAKER_02: Uh reports are they're about 20 of the 25 million metric tons if you combine their actual sales and then the unknown sales as well.
• 2:25
  SPEAKER_02: So they're getting pretty close to that number.
• 2:27
  SPEAKER_02: Uh, as Brazil, South America starts harvesting, it'll be interesting to see is is China gonna switch to them as they start harvesting their crop.
• 2:35
  SPEAKER_01: Yep, it'll be China demand if that can continue versus South American crop progress.
• 2:41
  SPEAKER_01: Which one of those two will win the upper hand going forward?
• 2:44
  SPEAKER_01: That's gonna help control where the soybean market goes, especially after most harvest now is wrapped up.
• 2:50
  SPEAKER_01: Let's talk about one of the bigger elephants in the room this week, which was something we've been waiting for for quite a while, and that was China sniffing around U.S.
• 2:58
  SPEAKER_01: wheat.
• 2:59
  SPEAKER_02: Yeah, Mike.
• 3:00
  SPEAKER_02: So, you know, quite a while ago, China did say they will agree to buying$17 billion worth of non-soybean goods.
• 3:08
  SPEAKER_02: Uh, they are gonna be a goods that are non-soybeans, and um haven't seen really anything materialized from that.
• 3:14
  SPEAKER_02: So markets really been looking for that.
• 3:16
  SPEAKER_02: You know, a lot of rumors that they would buy some U.S.
• 3:19
  SPEAKER_02: wheat or U.S.
• 3:20
  SPEAKER_02: corn.
• 3:20
  SPEAKER_02: And yesterday there was a headline that came out that uh China makes its first inquiry for U.S.
• 3:26
  SPEAKER_02: wheat since the Trump G meet there.
• 3:27
  SPEAKER_02: And Bloomberg did report that's a pretty reliable source, uh, but didn't see any confirmed flash hails from the USDA.
• 3:34
  SPEAKER_02: So uh let's watch that over the next week.
• 3:36
  SPEAKER_02: And hopefully this is something that can really help bottom these green markets.
• 3:40
  SPEAKER_01: Here's my big thing lately.
• 3:42
  SPEAKER_01: Technically speaking, a lot of folks keep wondering is is this enough?
• 3:46
  SPEAKER_01: Has the corn market gone down enough that we can finally find a bounce from this?
• 3:51
  SPEAKER_01: What's the bottom?
• 3:52
  SPEAKER_01: So when I start to talk about where this corn market is, December's old low in the end of June was 425 at the low on that break.
• 4:00
  SPEAKER_01: When I talk about what I'm seeing technically, I would argue technically, I'm seeing some things line up that would maybe suggest soon enough we could see a momentum turn for us in the favor of a recovery in this corn market.
• 4:15
  SPEAKER_01: Maybe not quite yet, but it seems like things are coming together to where I could see this technically uh happening here, maybe by even the end of next week.
• 4:24
  SPEAKER_01: Now that's very key because we're only about a week and a half away from the next WASDIR port in November.
• 4:30
  SPEAKER_01: Now, typically that'd be pretty much on the boring side, wouldn't you say so versus what we've normally seen?
• 4:36
  SPEAKER_01: I I know you did some research on that this week.
• 4:38
  SPEAKER_01: What did you find that the October to November WASDIR port usually brings us?
• 4:43
  SPEAKER_02: Yeah, over the last 10 years, there's maybe a half a bushel change.
• 4:46
  SPEAKER_02: Uh so pretty, pretty quiet there.
• 4:48
  SPEAKER_02: They wait till January to make the big change.
• 4:50
  SPEAKER_02: But like speaking technically on this corn market, like it seems like we got to this 450 level.
• 4:56
  SPEAKER_02: The selling hasn't hasn't turned off, but it's it's definitely slowed up here.
• 5:00
  SPEAKER_02: So I look at that old January low 445.
• 5:03
  SPEAKER_02: I'm really looking for that to hold, and like you said, below that, the 425 to hold.
• 5:08
  SPEAKER_02: But it seems like we're running out of selling pressure.
• 5:11
  SPEAKER_02: Harvest is wrapping up in the area.
• 5:13
  SPEAKER_02: Um, there's really we just we're searching for a bullish catalyst, it seems a new one right now.
• 5:18
  SPEAKER_01: And that's why I brought it up because this China buying corn and soybeans business could be that potential catalyst going forward that we're gonna want to watch very closely.
• 5:28
  SPEAKER_01: Because, like you said, they haven't bought anything then since the President G Trump meeting.
• 5:32
  SPEAKER_01: And they're supposed to buy$17 billion worth of egg products from the U.S.
• 5:37
  SPEAKER_01: That's not soybeans.
• 5:38
  SPEAKER_01: They would love beef.
• 5:39
  SPEAKER_01: We're not gonna let them have it.
• 5:40
  SPEAKER_01: We're gonna keep all that for ourselves, basically.
• 5:43
  SPEAKER_01: They obviously don't want pork right now.
• 5:45
  SPEAKER_01: It doesn't seem like anybody wants the pork, and uh it really leaves ethanol by uh and other biofuels along with corn and soybeans left for them to pick up the slack uh on, and especially since they can't do soybeans, then it's obviously corn and wheat.
• 6:01
  SPEAKER_01: So uh the big picture right now, I think, just remains uh China buying versus South America weather and any improvements or progressions there as their crop progress is picked up lately, any obviously black swans that come into play, just like we saw Monday with President Lula's election and the currency.
• 6:18
  SPEAKER_01: That by uh just to bring into consideration, that was a second worst day for a close in Brazilian currency history ever.
• 6:27
  SPEAKER_01: That was the hardest sell-off, second hardest ever.
• 6:29
  SPEAKER_01: So that was a huge impact to the soybean market.
• 6:32
  SPEAKER_01: I believe uh a few folks like Stonex tried to put it into terms of what that meant for the U.S.
• 6:37
  SPEAKER_01: soybean market.
• 6:38
  SPEAKER_01: I think it was a 40-50 cent move in soybeans, was what the worth of that did.
• 6:43
  SPEAKER_01: So uh let's look forward to next Tuesday.
• 6:46
  SPEAKER_01: We have uh the midterm elections, which I would argue it's more of a currency play, right?
• 6:51
  SPEAKER_01: Uh just like we saw out of the Brazil election.
• 6:54
  SPEAKER_01: If you see more of the liberal-sided party win, a little bit less fiscally responsible, that will probably result in a weaker currency going forward.
• 7:03
  SPEAKER_01: That weaker currency helps U.S.
• 7:05
  SPEAKER_01: exports.
• 7:06
  SPEAKER_01: So that's one of the most direct ways I could see uh midterms next Tuesday impacting the grain markets, other than just money flow.
• 7:13
  SPEAKER_01: It's the last trade day of the month today.
• 7:15
  SPEAKER_01: Um, you know, we got Q4, we got uh uh, you know, midterms coming up, a lot of money flow going on at the end of this week that we've seen changing hands with cattle.
• 7:26
  SPEAKER_01: The equities are getting destroyed today.
• 7:29
  SPEAKER_01: Uh the grain markets have been getting wrecked pretty good as those funds pulled out of those.
• 7:33
  SPEAKER_01: So those are a few things I'm looking forward to.
• 7:35
  SPEAKER_01: And then the Wazir report up until about the second week of November coming up there.
• 7:40
  SPEAKER_01: So anything else for our listeners today, Jaden?
• 7:42
  SPEAKER_02: Yeah, I would just say, Mike, looking at managed money.
• 7:44
  SPEAKER_02: Uh last week, uh this week's report hasn't came out, but corn is reaching a neutral spot there, uh, getting close to zero long there.
• 7:52
  SPEAKER_02: So it'll be interesting with all the money going to the sidelines at the end of this week.
• 7:56
  SPEAKER_02: Uh maybe, maybe we can get a you know, maybe a flash sale of China, something along those lines, and maybe, you know, something that can change this market around.
• 8:04
  SPEAKER_02: Hopefully we can see some more money come back in these greens.
• 8:07
  SPEAKER_01: All right.
• 8:08
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• 8:11
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• 8:11
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• 8:15
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