We had a very poor week for export sales. It was as bad as it’s been in a couple decades for the amount sold for that week. At the same time, that 20 cent move up (Wednesday) was based on rumors China was buying corn…a million tons supposedly. We have not had confirmation on that, but usually where there’s smoke there’s fire, so we’ll see what happens.
Gulke believes the market across the board is being supported because the trade believes USDA "grossly underestimates demand by China. "I suspect most that got priced in at that 24-cent move up we had. However, what is questionable about the whole thing is that China doesn’t just come in and buy just one million metric tons necessarily, if they’re going to buy big. That could very well come out of Argentina at least initially."
Gulke says those numbers need to be reflected in next week’s USDA export demand report, or the market will forget that it is trying to ration demand.
On the wheat side, believes the market is fixated on spreading strategy from the traders. "I see it building a short position in the wheat market. A sudden demand shock that we aren’t planning on would really turn that around. Then the shorts have to run for cover, and we’ve seen that before."
In the soybean trade, it was the exact opposite story that we had in corn. China came into the market in a very big way and that pushed prices higher.