China: Hoovering Up US Soybeans & Corn

China is scooping up U.S. corn and soybeans as part of efforts to mitigate the risks to commodity supplies from Russia’s war in Ukraine and slower harvests in South America.

Chinese buyers recently booked about 20 cargoes of American soybeans and about 10 shipments of corn, according to traders who asked not to be identified as they aren’t authorized to speak publicly. The buying spree reflects robust demand in the top importer as worries over supplies grow following Russia’s invasion of Ukraine and weaker-than-expected supply from Brazil, the world’s biggest soybean producer.

Those purchases come after the Phase-one deal agreement between China and the U.S. expired without agriculture targets being met. Through December, the U.S. exported $34 billion of agriculture to China, short of the $40 billion target, according to U.S. Census Bureau data. While both countries are talking about extending the deal, it’s expected that China will buy more American products to secure needed grain supply amid tight world stocks.

The U.S. soy purchases are for shipment from May onward, the traders said. That is unusual as Brazilian soybeans are historically cheaper than American for this time of year, right after the harvest that takes place in February and March and before the U.S. harvest in October and November.

Prospects of a record Brazilian soy crop this year were shattered by weather woes that ended up delaying the harvest, and exports, far behind initial estimates.

This lack of immediate supply is seen on huge ship lineups outside ports in Brazil as well in premiums for the crop. Brazilian soybean future contracts from Santos are higher than those from the U.S. Gulf this year – a sign that supplies from the world’s biggest producer and exporter are smaller and more demand should go to the U.S.

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No surprise the stocks of grain traders like Bunge and ADM are doing very well.

Its good times for agriculture stocks in the US. Even Deere is doing ok.

Farmers are concerned about rising fertilizer costs as nitrogen fertilizer comes mostly from natural gas.

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Farmers are concerned about rising fertilizer costs as nitrogen fertilizer comes mostly from natural gas.

Exactly. Been playing $MOS this week, and just exited at the bell. $52.00 and change and exited at $59.00.

One that I’m in for the long run this year (thanks to NPR tip about two months ago) is $JJN (Nickel). That’s up about 40% in 6-7 weeks.

One I’m in half-way and ready to add is $XLRE. Riding a gain now, but, I want a bigger bet when the bullish crossover comes - if it comes.

I played $NSA for a very good 10% rise, then was about to switch to $AMT. Then saw $XLRE needed more than my first nibble last week. So added twice this week to $XLRE and looking to go all in soon.

Got a couple more things I’ll share in my weekly writeups.