Good Morning,

Corn is down 2 and beans are up 2 to start the week. Some support in the bean markets as rising prices in China helped to underpin the markets. Corn in Dalian (Major port city in China) was up $0.17 and soy meal was up $6.70. However, the strong gains have traders questioning if we will continue to see the Chinese continue with their large orders like we saw last week. There are a couple of theories as to why Ag prices are rising so quickly in China. The first is that their grain demand is just better than expected after flooding in the far southern parts of the country has damaged stored supplies. The second is that with political tensions between the US and China rising once again that Beijing will pull back on its Phase 1 commitments and leave China with a tight supplies between now and when the South American harvest begins in January. In June, China imported a record 11.2 MMT of soybeans (mostly from Brazil) and corn imports were up 25% as well. Normally we would see these massive influx of beans going to state reserves, but it appears as though the Chinese are in need of more feed grains. The rise in corn looks to be mostly speculative with Chinese farmers expected to begin harvesting there in another 6 to 7 weeks.
I would not recommend chasing any potential rallies in the market and advise producers to get sales on the books ASAP. The political rhetoric between the US and China is heating up again and could devastate prices even more. With a big crop on the horizon for the US and COVID numbers continuing to rise at an alarming rate the next ten days could be quite telling for prices for the balance of the year.

Have a Safe Day!

Garry Gard