Daily US grain report: traders wonder how China’s big US ag purchases can happen

US grain futures prices were weaker overnight. Corn and soybeans were down 1 to 2 cents and wheat was off around 4 to 7 cents.
calendar icon 18 December 2019
clock icon 4 minute read

The markets are seeing normal downside corrections following recent good gains that have changed the near-term technical postures to bullish for wheat and soybeans and neutral for corn.

Grain trader enthusiasm has receded a bit at mid-week, following last week’s US-China partial trade agreement. That deal has yet to be signed and there are many sceptics that wonder how China will be able to purchase $40 billion worth of agricultural products, which is about double the previous record-high annual China ag purchases from the US. Some believe part of the total will be US farm equipment and not just ag commodities.

Price rally negates price downtrend line. It appears the market has finally bottomed out and can trend at least sideways in coming weeks
Price rally negates price downtrend line. It appears the market has finally bottomed out and can trend at least sideways in coming weeks

© Jim Wyckoff

Soybean oil futures this week hit a 1.5-year high as US lawmakers have amended a government spending bill to extend a tax credit for the biodiesel industry through 2022 and retroactively to when it expired in 2018.

Price action into the end of the year will likely go a long way in determining if the US grain futures markets can sustain price uptrends, or continue to languish and trade sideways.

Bulls have strength as price uptrend line in place. Market bottom likely in place to suggest at least sideways price action into the end of the year
Bulls have strength as price uptrend line in place. Market bottom likely in place to suggest at least sideways price action into the end of the year

© Jim Wyckoff

Grain traders are looking more closely at weather in South American crop-growing regions. While there are no major problems at present, there are some dry pockets traders are monitoring to see if the dryness persists.

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