Wheat Is Market Story but Analysts Still Watch for Soybean Buys

02:28PM Jul 15, 2020
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During Wednesday, Grain markets turned mostly positive with wheat up double-digits on rumors China purchased two cargoes.

“The corn sales are positive but wheat is the one [with] the double-digit gains,” says Alan Brugler, president of Brugler Marketing and Management. “[With] corn, it’s actually a little disappointing we’re not seeing more buy-in on the export business.”

Brugler says the rumor is just one factor to why wheat saw big gains during Wednesday’s trading session.

“You’ve got some export sales to China announced earlier in the week,” says Brugler. “You’ve got rumors of other business. You’ve also seen several of the major competitors on the export market lowering their production forecasts.”

Those rumors following more confirmed purchases by China, including a 132,000 metric ton buy of U.S. corn and a sale of 389,000 metric tons of soybeans.

Corn may be getting some big buys from China but analysts are watching soybean purchases, especially since the country is historically known to ramp up purchases soon.

“If you’ve looked at those new crop purchases in past years, they’ve really started to take off about the first of August,” says Brugler. “They ramp up a little bit in June and July but they really kick in during August and September on volume. If [China is] going to follow their normal pattern here, then, I think we could see some really large totals going forward for fourth quarter shipping.”

Other analysts agree.

“I think their demand is growing and they want to have more on hand in case there’s another trade war down the future here,” says DuWayne Bosse, a market analyst with Bolt Marketing LLC. “I look for higher prices in the future for soybeans.”

Bosse believes soybeans could turn friendly, especially if talk of dryness creeps into August.

“We now have a new crop ending stock of 425 million bushels,” says Bosse. “[It’s] still relatively tight though. If we get the drought talk going during August, [prices] could be sharply higher. That 425 million bushel ending stock I mentioned, you turn that down to 325 million bushels and we got a very tight situation.”