Quick Soybean Check-In — and One More Reason to Be Bullish on Corn

Zack Gardner 
Grain Marketing & Origination Specialist

China has been coming through, almost every other day, for soybean purchases. So far, it is estimated that China has bought approximately four MMT (about 146 million bushels), of the 12 MMT agreed upon between President Trump and Xi last month. China is close enough to being on pace with their buying, that reaching the 12 MMT total is plausible. That being said, two questions remain in my mind:
 

1. Of the 12 MMT agreed upon for total purchases in 2025, does that include the approximate 6.10 MMT of soybeans that China had already purchased and taken shipment on earlier this year? If so, China may only need to buy approximately 1.90 MMT (about 69 million bushels) more versus about 294 million more bushels if they bought 12 MMT of new soybeans.
2. When will they take shipment on these purchases? Only three cargo ships have been put in route so far to load soybeans at U.S. ports. Tensions rising over Taiwan or Venezuela/Colombia, could risk cancellation of these soybean purchases. I think this is one of the reasons why the market hasn’t been getting more excited at these overnight flash sales of soybeans to China. If they haven’t been physically loaded, they are at risk of cancellation, especially as cheap Brazilian new crop soybeans come online in February.

Recently, I have been tempering my bullishness in corn. I do think the USDA will need to drop yield again on the big January report, but I also think feed demand is pretty over-stated with the lack of cattle imports and corn yield estimates rising recently in a lot of the fringe states. Since harvest started, there hasn’t been a rail market out west as that feed demand is being covered by the Kansas, Nebraska, and South Dakota corn producers. Last week I heard that a lot of ethanol plants and grain elevators in the Dakotas are running full as they’ve run out of space for this crop, with 15 percent still left to harvest. But this week, I’ve turned my corn outlook from just being friendly, back to being bullish. Last week, JCI (a private analyst in China) broke a story that 10 percent of China’s corn crop is damaged from flooding and will need to be blended. Then this week, “unknown destinations” which is usually China, randomly bought 273,998 MT ( about 10.70 million bushels) of corn from the U.S.

The USDA currently has very little corn exports penciled in for China and not only does the math work, but the math (price difference between China’s domestic corn prices versus import prices) is growing. On the chart below, the orange line is China’s domestic corn price which is rising, and the flat blue line is the price of imported corn. 



With how little the USDA has penciled in for Chinese corn imports, there is huge potential. Especially when South America will be tied up with soybeans come February. We will be the only game in town if China needs corn for blending their damaged crop.