The US soybean market seemed pretty pumped up about the confirmation China had reduced tariffs on US$75Bn worth of products which includes soybeans and pork. The US wires generally failed to mention that China just bought 1mt of S.American soybeans though. Some say even this is seen as positive for the market as it implies that China will not use Force Majeure due to the coronavirus to walk away from existing contracts.
In what looked almost like a thumb to the nose gesture from China there was confirmation of two vessels of wheat from France. China has basically walked away from US, Canadian and Australian wheat over the last couple of years. It’s easy to explain the Australian side of that statement but the US and Canada continue to struggle with Chinese sales. In the meantime French wheat exports to China have increased and it’s now looking like France will be the biggest loser if China do indeed start to buy US wheat.
France confirmed that soft wheat exports are still on track to make a six year high. Shipments in January totalled 1.33mt bringing the annual total to non-EU destinations to 6.37mt. Some punters have France pencilled in to ship 12.4mt this year so records basically need to be broken if this is to be achieved.
The recent slowdown in Russian wheat exports didn’t hurt the French program. Year on year total Russian wheat stocks were around 7% lower than the start of January a year ago. This figure is now closer to 4% lower year on year, the higher offer values for wheat out of the Black Sea in January slowed exports and helped stabilise stocks as anticipated. Russia is still expected to move about 32.2mt this year.