Early in the week, attention was focused on renewed trade tension between the US and China. Following last week’s spat over rare earths and increased tariffs, both sides have since dialled down the rhetoric. The White House and Beijing appear to be testing a more conciliatory tone, with Trump and Xi now set to meet at the upcoming APEC summit in South Korea in two weeks’ time. Soybeans and rare earths will headline discussions, but any soybean-related deal may come too late for US growers, as China is reportedly covered through December/January, and South American new-crop beans will hit the market soon after. Trump wants a return to pre-trade dispute volumes; China insists it can buy elsewhere. Trump’s playing checkers, China’s playing chess.
Overnight, the US announced fresh sanctions on major Russian oil companies after failing to draw Putin to the negotiation table.The sanctions aim to put more pressure on Russia in an attempt to bring about resolution to the conflict with Ukraine and to deter nations attempting to bypass existing restrictions. Crude oil prices jumped in response, sparking a broader rally across commodities.
With the USDA still offline, several private analysts have stepped in to fill the information vacuum. Zaner Ag Hedge has been compiling export estimates based on trader surveys. By their account, corn is flying out the door, with exports believed to be between 49% and 62% above last year’s level. Wheat too, is running 14% to 22% above last year’s level. At this pace, wheat exports are already 57% of the USDA export forecast, with seven months left in the marketing year. Poor old soybeans are lagging badly, trending somewhere between 27% and 42% below last year and marking a 17-year low.
The Russian wheat export tax was reduced from US$6/t to $4/t, making Russian wheat that much more competitive on the world stage. October exports have picked up, indicating that demand is there. Some of a recent 600kmt Algerian tender was awarded to France, but notably Argentina also picked up a decent volume. It points to how cheap Argy wheat is that it can compete all the way across the globe compared to the relatively short hop from Europe.