Export sales data was not the only factor offering support to grains Thursday.
U.S. Department of Agriculture officials reported a private export sale of 272,000 tons of soybeans to China for 2019/2020 marketing year delivery. Jim McCormick, branch manager of Ag Market.Net, says export data pairs well with trade rumors.
“There are reports out of China that they are going to be buying up to 10 million tons of (soy)beans, 20 million tons of corn, and one million tons of cotton to put into their state reserves. On top of that, there are also reports they might add one million tons of sugar and two million tons of (soy)bean oil, as they are trying to restock shelves, as well as a little bit of leeriness of not being able to keep people fed if food shipping lines go down, due to the pandemic. This is positive news for the U.S. producer,” McCormick said.
Such purchases could help offset domestic demand destruction, according to McCormick. Ethanol would greatly benefit, as it stares down significant losses.
“If China would come in and buy 20 million metric tons of corn, you’re looking at almost 800 million bushels of corn. If they would fulfill this, they would do a lot to off-take some of that loss to domestic demand destruction and hand it off to the export market, which would be good to see,” McCormick said.
Chinese government officials have yet to confirm these reports. McCormick, however, says the scenario makes sense.
“Their stocks are low. Our prices are cheap compared to their prices,” McCormick said. “It makes political sense as well, (they’re) making sure they have food for their people. Lastly, this will help fulfill the Phase One deal they made with President Trump.”