RUMOR MILL - China to Buy US Corn!! Fair or Foul??

Añadido: 2026-05-30

[00:00:01]Morning, guys. It's Friday, May 29th, 5:27 a.m. Central time. Grain markets are mixed this morning. Welcome back to Grain Markets and Other St. This is the grain greatest. This is the greatest Brian grain market show of all time.

[00:00:14]>> I think it's the grainest market show.

[00:00:16]>> Well, yeah, it is that also. Um, Mackenzie's here. Mackenzie, good morning.

[00:00:21]>> Good morning, everybody.

[00:00:22]>> All right, start off with China. So, excessive rainfall across China is raising concerns about potential crop damage. Major agricultural regions are experiencing unusually early and intense rainfall with heavy precipitation expected to persist through the end of the month and into early June. Prolonged wet conditions and limited sunshine have already delayed wheat development in some areas. Additionally, strong winds and heavy rain have flattened some fields, which of course will complicate harvest and also increases the risk of mold. Elevated moisture levels are also expected to create favorable conditions for the spread of pests and crop diseases.

[00:01:01]>> I didn't sleep good last night. I need more coffee. Never happened to you guys.

[00:01:05]You still don't sleep good yet?

[00:01:06]>> Yes.

[00:01:07]>> I can't talk.

[00:01:08]>> Maybe you had too much coffee.

[00:01:09]>> No, not not not enough yet. Um Okay. So, weather is is apparently a story. too much rain in these areas of China that represent 20 or 30% of production. I'm not seeing it in the forecast. Maybe this is past rain or maybe this is just some fear-mongering. But um in any case, China is expected to be again the second largest corn producer on the planet.

[00:01:31]This however is not really the story, Brian. story as it relates to China were rumors yesterday that China would reduce tariffs on grain imports and some people thought that this could lead to additional Chinese purchase or not additional any Chinese purchases of US corn. Is that what you've heard and do you believe it's possible? Yeah, that was kind of the rumor mill and and I think the story and narrative about the weather in China spurs the idea that hey uh they might need the grain more so than uh have their weather been normal and they'd have good crops obviously. So uh ideas that uh they're going to take away those import restrictions or reduce the tariffs uh to further accommodate the idea that they're going to buy US agricultural products. That was definitely part of the story yesterday.

[00:02:17]Um I don't know. I I think China will eventually buy. Uh I think the timing of their purchases is key >> and if if history is a guide um that they're unlikely to show up in the US marketplace until mid to late July to early August.

[00:02:35]>> I was pulling this data this morning.

[00:02:37]Chinese corn ending stocks according to USDA are projected to drop for what the third consecutive year. um they're going to drop almost 7% from last year and almost 13% from two years ago. I don't know that this data is accurate necessarily and I don't and they're still sitting on a ton of corn. I mean, they're sitting on almost 60% of all projected global ending stocks if you're to believe the US data. We did have this fact sheet and put the word fact in quotes from the White House a couple weeks ago and they said, "Hey, China's going to buy $17 billion per year in egg products and it's it's non- soybean egg products. It's in addition to the soybean commitments that China has already made. And when China buys $17 billion in non- soybean egg products, it tends to be corn. Like a good chunk of it tends to be corn. So is are we supposed to go with this assumption that the White House is is uh telling us the truth on this or is it more of a wait and see?

[00:03:31]>> Based on previous history, we've got uh little bit of mixed signals. Um, >> yes, >> the original 12 million tons that was discussed in in fall that happened.

[00:03:43]>> Absolutely.

[00:03:44]>> A little bit longer timeline than what was on their original fact sheet, but it occurred.

[00:03:48]>> U, that second round of of buying that was discussed on social media by President Trump a few months ago, that did not. Um, >> that was never in a fact sheet, though.

[00:03:57]Correct. Fact sheet was never.

[00:03:59]>> So, so the fact that this is in a fact sheet uh puts it more in line with the original deal of the 12 million tons.

[00:04:06]which I think gives it more credence if the White House is willing to put it on a fact sheet.

[00:04:10]>> So again, now timing is the issue, but we're going to have a lot of old crop corn that is going to be dealt with in the next couple of months as we get into harvest. That would be a perfect time for China to swoop in and take some corn if they need it.

[00:04:24]>> Okay, so the corn market bounced a little bit yesterday, I think, on these rumors or chatter. Let's go to price action. Soybean futures also rallied yesterday with the November 26 contract gaining nearly 13 cents to settle at 1194 per bushel. The move higher coincided with strength in crude oil prices. As you said, corn futures also advanced with the December contract rising roughly 5 cents to settle near 4.82 per bushel. Wheat futures were narrowly mixed as traders appear to have largely priced in poor conditions across the US winter wheat crop and are now shifting their focus towards ample global supplies. All right, we will take this opportunity to let Brian explain the charts to us. Um, Dcorn, we kind of busted this trend line. Brian, does the trend line still matter? First question.

[00:05:10]>> Um, it's a one component. Um, I think really ultimately when I look back at how um a similar year price point-wise and and timing wise for a seasonal high, uh, the kind of the gateway to the aggressive bare market type seasonal selling was breaking through the April lows. Um, and so I I don't doubt that maybe in the short term we could uh take out this trend line support uh revisit that April low. I do think the April low is likely to hold in early June until we get to the June WASADY report. Uh I think we should likely bounce from that area. Uh but to me uh in my mindset right now, that balance is my next opportunity to uh do any additional marketing for new crop uh that I want to get done before the month of June is over.

[00:06:01]>> Why are you such a doomsday?

[00:06:03]>> Um because I'm going to just assume kind of normal tendencies until proven otherwise. And uh when we have the highs uh that have occurred uh from a timing standpoint and a price standpoint um and again the similarities to uh how we're we're moving price-wise uh compared to other seasonal times of highs in May uh unless something changes meaning uh something you know develops in the weather that makes the funds concerned about production losses um we have a major resurgence in the Middle East instead of an off-ramp and we see crude oil, you know, run back to 100 plus. Unless those two one of those two things happens, um, we should and and and seasonally would have a a high made in in spring and breakdown in values through July into August. And then in August, you get your first uh yield adjustment from the USDA because they don't adjust yield in June or in July unless there's a weather event that says, "Hey, you need to take yield down." uh otherwise they wait till August and then they'll raise yield in August if weather uh suggests that we have an above trend crop and then we'll we'll put a low in that time frame. So I'm assuming normal uh from from a weather standpoint and that we're on track as far as the off-ramp in the Middle East and those would portend to to me to believe that we're going to see a reduction in the fund position over the next few months.

[00:07:28]>> To those of you who say trend lines don't matter, they obviously do matter in the soybean market. The trend line held perfectly on Wednesday and now we're back up. Uh part of the strength here yesterday was soybean oil which was up a couple percentage points. It's kind of led the charge here. Crush margins in the United States are the best they've ever been which is going to continue to inspire massive domestic demand. Uh but this looks like a very good looking it's a good looking chart. Uh we still held the uptrend absolutely and um and there there was an uptrend in corn that we had held yesterday as well that we had bounced off of on a on a continuous basis. So uh uptrend support is here. Um we also went back and revisited those early March highs which we had a midappril high at that same level about that 1174. So yesterday's low was 75.

[00:08:14]Kind of rechecked that old shelf. Um I think if we had the short-term downtrend on the chart too from one peak to the next that's about where we went overnight. uh that kind of matches up with a little bit of a high in late April horizontally at $12. So, um this might be building a bit of a head and shoulder structure if we can't really break back up through 12 on the bean oil strength. Um and then we we've really identified over and over that below that 1165 to 70 area then uh we've got some negative chart development. So, it hasn't happened yet. We're thinking about how things could evolve over the next couple of weeks. Generally, the bean market will wait a little bit longer than the corn market to break.

[00:08:55]So, I think corn's kind of the short-term priority. Um, and and soybeans may meander around or or start to grind lower in the month of June, but uh more often than not, they wait a little bit longer than corn for their their major downtrend to develop.

[00:09:10]>> HRW wheat um the southern plains drought story has obviously run out of gas for the time being. um we took out that low from earlier this month here yesterday and overnight. Uh where do we go from here?

[00:09:25]>> So absolutely critical that we hold those old highs that we had when the war started. So you think about back in early March and then in kind of mid to late March and then we broke through that in late April and uh that old shelf is the upper end of a trading range. So unfortunately, if we were to really start to close this particular contract uh below about the 660ish area, uh then you've got your trend line support. But I think uh really ultimately if we're below 660, we're going to want to go take a look at the low end of the range.

[00:09:55]We still have that gap on the chart.

[00:09:57]That is going to be an open target. And um one of the things that we took a look at in the premium video on Wednesday was uh comparisons of this year's corn, soybeans, and wheat to another previous year. And the one that really scares me the most is actually the July hard red wheat. Um we had made some highs in May in that particular year. Uh we had come off of the highs really at the same cadence that we're doing now. There really wasn't any type of a bounce and it just continued to grind lower into June and it went all the way down. Um and we had made a high in May on the on that particular year at 746 and a quarter. So we've got a 750 high on this contract. we broke all the way down to about the 570 level uh by late June. It was just a consistent downtrend. So, I'm concerned that as we get into harvest uh we've already priced in the uh lack of supply u the supply reduction due to the drought um and now we're working towards harvest and harvest pressure and still the idea that globally we have uh plenty of wheat.

[00:11:00]>> Let us venture to the Middle East. So the US and Iran have reached a preliminary agreement to extend their ceasefire by 60 days. President Trump, however, has yet to approve the deal and is expected to take a couple of days to review the terms. Key US key US demands include the reopening of the straight of Hormuz, the surrender of Iran's highlyenriched uranium, and a complete halt to its nuclear program. Iran, meanwhile, is seeking uh sanctions, relief, and access to frozen assets despite ongoing negotiations. Both sides continued to exchange military strikes, highlighting the fragility of the ceasefire. Crude oil prices rose early on Thursday, but later gave up most of those gains with WTI crude finishing up just.3% at around $89 per barrel.

[00:11:48]>> I'm told, Brian, that crude should be 150 bucks. But guess what? at Cushing, Oklahoma. It's worth 87 bucks.

[00:11:55]>> That's about it. Uh we've had a wild uh uh trading range obviously with the onset of the war in the Middle East and then the on again off again over the last couple of months. And I think it's pretty plain as day that u in order to return to, you know, normality u we we're going to have to see the market willing to put crude oil back below $80 a barrel. Um once we're back below 80, then we're likely to go back and and uh see 60 to 65. Uh but uh until the market is is below 80 a barrel, to me it still suggests that there's uh not a definitive idea that things are done yet. Uh but we get President Trump to agree to this and it really looks like this is coming to an end. I think we'll be back below $80 a barrel pretty quickly. And then that's another layer of of you know what does that mean for grain markets if we're back to uh you know 65 $70 crude oil.

[00:12:53]>> Sidebar Brian.

[00:12:54]>> Mhm.

[00:12:55]>> Uh there's been a lot of discussion in the comments about manipulation of crude oil prices and people pointed to uh some of the big trades that were made ahead of the Trump uh social media posts ahead of some of the things out of the White House. And my point uh yesterday, maybe I didn't make it clear enough, um is that it's pretty hard to manipulate the global physical oil market or even WTI futures. I think there is a difference between insider trading, which happens every single day, and the full-blown manipulation of a massive contract like WTI crude futures or even more so the physical oil market.

[00:13:35]>> Uh agree. I think we've definitely seen some insider trading. That's occurred in the S&P. I think that's occurred in in uh in crude oil undoubtedly. There's been I think some insider trading in soybeans. Um but >> and is that anything new to you?

[00:13:50]>> No. Um I think that's a story as old as time.

[00:13:55]Of course it is. Who who's doing it when?

[00:13:58]>> Um but uh as far as Yeah. Can you truly manipulate the value of a global product like that? Um I think you can use policy and certain things to to shape direction.

[00:14:11]>> Sure. The SPR good example, >> but um to to be able to truly control the the price of it. Um I I don't there's a lot of other cogs in the wheel that uh have their say as well.

[00:14:22]>> Yeah. Okay. Drought monitor. Uh the cornbt was mostly dry last week with the exception of heavy rainfall across the Ohio Valley. The precipitation led to improvements in drought conditions in Kentucky, southern Ohio, and southern Indiana. In contrast, limited precipitation caused conditions to worsen in northern Indiana, northern Illinois, southeastern and northwestern Wisconsin, much of Minnesota, and northern Iowa. Portions of the High Plains received rainfall last week, but unfortunately it did not lead to improved drought conditions. When we look at the percentage of US areas experiencing drought, corn country currently stands at 25%, soybeans 27%, winter wheat 69%, spring wheat 23%, and cattle country 60%.

[00:15:06]>> We've had a ton of rain down here in the southeast part of the country in Middle Tennessee. It's supposed to rain every day for the next 5 days. I'm going fishing in Alabama this weekend and we're going to get rained on all weekend. Um, central cornbt, Brian, has been uh a little bit drier and for some areas that's good. Like the state of Ohio, as an example, has seen a ton of rain and they kind of need to dry out.

[00:15:27]What are you hearing about current conditions, planting, all that stuff?

[00:15:31]Um, I will say that uh in the big picture when we think about planting and planting pace, all of that, uh, from a 50,000 foot view, it's fine. Um, now every year there's going to be pockets where people are behind, people are replanting, uh, it's dry. I mean, if you're a producer in in uh, Nebraska right now where it's super dry, you're concerned. If you're a producer in western Kansas that watched your wheat crop burn up and now you're thinking about what does this mean for my corn and soybean crop if I don't get rain for that, that, you know, that's a really bad growing season for them. Um, so there's always going to be pockets. It's not going to be perfect everywhere, but thus far, um, it's the end of May. Um, it's going to be dry for the next two weeks, and I think the market's dealt with that idea. Um, and and it's still going to be mid June by that time. If we fast forward to mid June, and the forecast is still dry for the next two weeks after that, um, then maybe you're going to see uh the market start to react. But um I I think uh we're going to see um you know the the forecast become uh very important daytoday. This is like that's my least favorite way to trade the market is watching weather forecasts our you know every model run and the American and GFS. It's like I hate trading uh to that uh with with that as the major input. But that's the time of year that we're in.

[00:16:52]>> It is the major input though. I mean >> this you know we're coming up on it. So, the way the forecast reads, a lot of the central and eastern cornbt will be dry over the next uh seven days, which is welcome in some areas, not welcome in others. And then you've got a bunch of rain kind of in the extended, which you know, that's a coin flip. To look at this through a different lens, our friends at Crop Profit estimate based on Euro Model data over the next seven days, US corn areas will see 93% of the normal rainfall, but I think that's because some of the areas in the West are going to see above normal and then drastically below normal or zero in the east. And then 8 to 14, it's a little more even kind of across the board. 116% of uh normal rainfall for US corn areas.

[00:17:32]Let's go to ethanol.

[00:17:34]>> US ethanol production declined last week, but remained at a seasonal high.

[00:17:38]Weekly output was reported at 1.09 million barrels per day, down 2% compared to the prior week, but up 5.1% versus the same week last year. Ethanol stocks climbed to 24.97 million barrels.

[00:17:51]The print was up marginally compared to both the previous week and the same week last year according to Reuters data. US ethanol margins range from 10 cents to 45 cents positive across the cornbt.

[00:18:02]>> Ethanol is a bright spot for demand. Uh Brian, do you have any uh takes hot takes on the E15 situation and what uh it could mean or won't mean for corn prices?

[00:18:13]Um, you know, E15, uh, I think it's one of those things where it's a headline and and, um, you know, uh, you get E15 year round, positive short-term headline. I don't know what the long-term dynamics of it are going to be, if we're going to use more E15 domestically, then there's going to be an impact on the global export program and and who gets what. Uh, so there might be a benefactor somewhere else that's going to export more >> uh, uh, ethanol to other parts of the globe. But um that's not my my main focus right now um by any means. It's it's the the growing season in front of us and and I'm really set on the idea that normal market tendencies um mean downward trends for the next two months.

[00:18:57]>> Such a doomsdayer.

[00:18:59]>> I mean this is just where I'm at right now, Joe. Sorry. It's I'm just trying to be honest.

[00:19:04]>> That's why that's why you're here. We appreciate it. Uh cattle got beat up a little bit yesterday.

[00:19:08]>> They did. live cattle were 53 cents to a buck 68 lower and feeders saw losses ranging from 83 cents down to a buck 60.

[00:19:15]>> Uh Brian quick cattle market thoughts.

[00:19:18]>> Um so we had a you know bearish report for the first time in a while and I think that is u something that you can argue about why it was bearish and why did the numbers get to how they are. But um uh that is maybe the first kind of in the armor that uh we might see for the cattle market. Um, I think we should recover a little bit here more short term in in the August live cattle and and the feeder cattle. Uh, but I am at a a standpoint there as well where uh I feel pretty strongly that if we see another few bucks added to live cattle here in the short term, we absolutely need to get uh some floors under this market. There's a very large uh put spread that was put on. And I think it was like a 230 uh 238 222 put spread which if you look at a August cattle chart um makes a lot of sense as far as the structure of the chart and uh I think we might be putting in a a right shoulder for head and shoulder pattern um which we discussed on the uh the premium video on Wednesday.

[00:20:17]>> Brian, thank you for joining us guys.

[00:20:19]Have a wonderful weekend. Be sure to drink your coffee earlier than I did. Um we'll be back on Monday. Thanks, Brian.

[00:20:26]Thanks.