Good Morning,

Looks like a case of “Buy the Rumor, Sell the Fact” in grains the last two days. Following yesterday’s formal signing of the Phase 1 deal, the market will remain skeptical until we see actual purchases from China. And those purchases will have to be in large volumes to move this market. Yesterday’s signing came with comments from the Chinese that they will be active buyers “when market conditions are appropriate”. This raises the question of how hard of a commitment is this deal and how long will it actually play out? I would expect buying will be slow in the front end unless we see some delays in South Americas harvest due to weather. Brazil corn and soybeans are still trading at a discount to US commodities into China without tariffs.
South American weather continues to be favorable overall following recent rains. Models remain in agreement for the balance of the month with a drier pattern developing over the next 10 days across Argentina and Southern Brazil. Models show rain moving north into Mato Grasso and will provide moisture to the majority of the Brazilian bean crop and safrihna corn acres for seeding. We will have to continue to monitor the conditions in Argentina, but for now there are no major threats to their pending record production.
The majority of producers and traders (myself included) were expecting the markets to at least trade higher after yesterday’s signing. The markets actions the last two days are reminders that you should take advantage of opportunities that are presented rather than waiting on something that may or may not materialize.

Have a Safe Day!

Garry Gard