Grains were lower again for the week with December corn losing 2 cents and November soybeans losing 12 cents.
Wild Week in Soybeans on Argentina Export Tax News
Soybeans posted a lower weekly close for a third week after a wild ride due to bearish export news.
Matt Bennett with AgMarket.Net says on Monday the market was still feeling the disappointment of soybeans not being included in the discussions between President Trump and Chinese President Xi.
Then Argentina announced they were dropping their export taxes of 26% on soybeans and 9.5% on corn.
China Buys Argentine Soybeans
Soybeans reacted negatively to the news but Bennett says the worst part was China scooped up to a reported 40 cargoes of soybeans from Argentina due to their lower price.
He says this signals that China doesn’t want to buy U.S. soybeans at any price.
“It certainly looks like China would like nothing more than to cause havoc, if you will, due to the fact that we have put tariffs on them,” he says.
Will China Buy Any U.S. Soybeans This Fall?
Bennett is getting more doubtful that China will buy any soybeans from the U.S. as they have purchased enough from South America to get through until the next Brazilian crop comes to market.
“Argentina enters the mix and all of a sudden any pent up buying that maybe the Chinese were kind of holding off on, they just fulfilled that and they filled it very rapidly,” he says.
Can Soybeans Hold $10 Without China?
Bennett says he was surprised soybeans were able to hold the $10 level with all of the bearish export news.
However, if China doesn’t start buying soybeans soon he thinks the market will be vulnerable to testing the $9.81 August low and could move even lower.
He says basis is already reflecting it with a wide basis, especially in states like North Dakota. “I am not sure they can even get a bid up in North Dakota in some locations,” he adds.
The caveat is if yields start to come down that could make up for some lost demand.
How Much Will Soybeans Yields Need to Fall to Make Up for China?
He says without China in the market USDA’s 1.7 billion bu. export projection is too high.
“USDA will need to lower than by 150 to 200 million bu.” he speculates.
Corn Market Sees Strong Demand and Lower Yields
Bennett says corn does not have a demand problem. In fact new crop exports are already at over 1.1 billion bu. which is a third of USDA’s record export projection.
Plus, yield reports are below last year in many areas of the Eastern and Southern Corn Belt.
Bennett thinks national yield needs to drop to around 182 bu. per acre but that USDA may not drop yields that much until the final report like they did in 2024.
Could Corn Hit $5?
So could corn prices hit $5 with the combination of lower yields and record demand?
Bennett says it will be a slow grind higher because as USDA lower yields in the WASDE reports they also have wiggle room to lower demand.
“I think that makes it difficult to get too much under 2 billion bu. on ending stocks at least for a while and that may make getting to $5 is tough lift,” he says.
