Grain Markets Are Giving Up on a Chinese Buying Boom

Added: 2026-05-27

[00:00:03]Grain markets are facing a mix of uncertainty with demand signals from China remaining muted, whether risks still unclear and improving crop conditions in the US putting pressure on prices. While El Nino continues to be a key theme, a lack of clarity around its timing and intensity is keeping markets guessing even as global supply dynamics from Argentina to Europe add farther complexity. So where does that leave grains and oil seeds right now? and what are the key drivers investors should be watching. Joining us now to break it all down is Bertrren Osterlay, VP of clearing and execution sales at StoneX.

[00:00:38]Welcome back, Bert.

[00:00:40]>> Morning, Jonah.

[00:00:41]>> So, I want to start with China because this has been a question that has been going on for a while now, but have we seen any meaningful buying of US agricultural products from them?

[00:00:52]>> Not yet. So there's been u one piece of news that got everyone excited. The uh Sino grain company in China put out a um domestic auction. But then when we looked at the amount of that domestic auction, it was a mere 50.9,000 tons of old imported soybean crops. So that amount is insignificant and uh therefore it's not giving us the signal yet that China is making space from domestic reserves in order to import more. So we're going to have to wait. And uh when we look at the US exports um because there's nothing new to China, they're still 2% behind the pace they need to be at in order to get to the annual figure.

[00:01:39]>> Okay. So even if China sits on the sidelines like what you just mentioned, what's driving the market right now then? Is it weather related? Is it going towards maybe expectations about El Nino?

[00:01:50]>> Okay. So about China, I think that we need to wait. We need to be patient. I think that the um deal that we discussed last week between the US and China is very much putting China in control.

[00:02:02]They've got choice in terms of timing and in terms of origin. Now, regarding El Nino, yes, there's been some noise this week about being trying to be more precise about what El Nino could do, and some analysts out there have said that it is likely to be um like the 1997 um episode, so about 30 years ago. Um, so it's very hard to try to compare what happened in 1997 to what could happen in the end of 2026, early 2027 simply because the crops are very different.

[00:02:37]>> So we asked our US colleagues and they said to us that maybe it could be beneficial for cancer wheat if we compare to 1997. Okay.

[00:02:45]>> And that wouldn't be cancer sweet right now. That would be the cancer sweet of next year. Next year. Yeah. And then I looked at the uh data from 1997 for Brazil because a lot of people tend to think that El Nino is going to be very much the focus for Brazil where it could be very hot, very dry for the next crop.

[00:03:04]>> And it's very difficult to look at the data from then and extrapolate it for next year. So I've tried to do that. I'm going to give you the figures. I don't think they're very conclusive, but at least it's to put things in perspective.

[00:03:17]So if we look at the 96 97 season in Brazil against 97 98 season um in Brazil in corn was 35.7 million tons and then it dropped to 30.1 million tons.

[00:03:33]>> So a drop of about 15.7%. Yeah.

[00:03:36]>> So if we extrapolate 15.7% less from the 140 we had this year would be 118 next year. Um, so first of all, the crop at the time was an awful lot smaller because the area was different. The type of crop was different. It was not the same seeds. So for me, it doesn't necessarily make sense to make that like for like comparison. But the interesting bit is that some analysts have already said that we could go from 140 to 110 um in previous estimates. So the fact that we've got 118 by that comparison somehow ties with what we've heard elsewhere.

[00:04:13]Now for soybean that's why it becomes more complicated cuz in the 96 97 against 97 98 seasons we were 27.3 million tons of production against 32 and a half. So it was actually an increase of 19%.

[00:04:28]>> This is also in Brazil.

[00:04:29]>> And that's also in Brazil. And so if we look at the 180 million tons that have been produced this year, if we add 19% would be 214 million tons. Very unlikely. Okay.

[00:04:39]>> And at the same time, >> the crop at that time was tiny compared to what it is today. So again, I think that it is >> um good to hear that people are trying to identify which kind of season we could compare to, but when we try to put into figures, it doesn't really make sense just yet. So for me, Elino is still a difficulty because it is still a question of timing and intensity and we are going to have to wait because it's still too early.

[00:05:08]>> Okay. Well, let's actually stay a little bit on corn and soybeans because prices have been under pressure. What's behind that move?

[00:05:15]>> So first of all, we've got the geopolitical arena. So um the US and Iran have been saying that they are close to a peace deal 95% there. uh the 5% is basically the bonds of last uh over the last few days once again. So the energy markets have been up and down up and down. They've been down a lot over the past 2 three days and it is taking that shine away from grains and all season. It feels like the grains and all in market is starting to get fed up and tired of that relationship with that war. Mhm.

[00:05:48]>> So obviously corn and soybean have gone down but also it's due to the fact that in the US the weather has been beneficial recently >> and the weather has been beneficial for late planting but also for the plants that have already been planted and it's beneficial for their early development.

[00:06:05]Right?

[00:06:05]>> So when we look at the figures we had yesterday from uh the USDA the soybean crop or the soybean area is already 79% planted. That's up from 68% for the 5year average. When we look at corn, it's 86% planted against a 5year average of 83%. So, it's going well in terms of planting.

[00:06:24]>> Yeah.

[00:06:25]>> Um, now >> what about Argentina?

[00:06:28]>> When Yes. So, when we look at other things that could come to put pressure, it's also Argentina. Mhm.

[00:06:34]>> So, Argentina has indicated that they are likely to become even more competitive on the international market simply because they are planning to reduce their export taxes for the next two years. So, 2027 and 2028.

[00:06:47]>> Uh in terms of figures in um corn, the 2027 percentages in terms of export taxes would go down from 8.5 to 7.5%.

[00:06:57]Okay? And then the year after down to 5.5%. And in soybean, it's more significant. it would be 24% down to 21% in 2027 and then in 2028 it would go down all the way to 15%. Absolutely. And at the same time we've heard of uh new estimates for the current crop. The corn crop is estimated in a 64 67 million ton range. It's a big corn crop in Argentina and for um soybeans about 50 million tons. So it looks like at present Argentina is not concerned about their nino. It's putting out some great figures and it's putting out that if they reduce indeed those export taxes, it's going to make them more competitive on the international market as well.

[00:07:40]Yeah.

[00:07:40]>> Now, having said that, um, so the markets in soybean, in corn have come off because of what we've just mentioned.

[00:07:47]>> Yeah.

[00:07:47]>> The peace potential and >> the weather >> the weather, >> but there's been elements of bounce of rebounds from time to time and they are on the back of what we've mentioned over the past few weeks in the US. I used to say good internal demand in terms of ethanol and the export figures are still quite good. They're 4% ahead of the pace required to get to the annual figure for from the USDA in the US.

[00:08:11]>> Are there any possible international tenders that might come up as well?

[00:08:15]>> Yes indeed. So uh Mexico has been tendering on a regular basis and also South Korea has been very regular. So that has supported as well.

[00:08:24]>> Okay. So what about wheat? because Chicago wheat has been under pressure and Paris has been doing a bit better.

[00:08:30]Is this purely down to weather differences? Because we've been, as you know, having a lovely heat wave here in the UK. So, I'm assuming that it spans to all of Western Europe.

[00:08:41]>> Mhm. It's absolutely um the case. So, when we look at the US, the weather has been better for corn and for soybean. It means it's also better for wheat, but it's beneficial to mostly the spring wheat, which is now 79% planted. Uh well actually it's 86% planty compared to the 5 year average of 79%. And it's not helping the uh winter wheat. The winter wheat is getting worse. It's 26% good to excellent. Um that crop is now in a state that people know about and it's factored in. Um that 26% good to excellent rating is actually the worst ever recorded.

[00:09:16]>> Oh wow.

[00:09:17]>> Um so yes it is >> beneficial to the spring wheat. It's not making any difference anymore to the winter wheat. Okay. And when we look at Europe, um, as you mentioned, we had a lovely 3-day weekend, lovely weather, quite warm, and it's been the look by the window syndrome in Europe. People look at the weather, see that it's really hot. Paris has been sustained.

[00:09:39]Um, now Chicago this morning was down another seven cents. So, Paris has followed. We were down €2 this morning, but it is coming off a lot less because people are somehow worried about the impact of the heat wave >> in part of Western Europe. So the UK, the Benelux and France in particular. So from now on, what we're going to have to do is in particular look at the Agriare crop condition reports that we get each Friday for French soft conditions and for French maze conditions and see if that heat wave is affecting those figures or not. um as as as of last Friday the um good to excellent ratings in soft wheat in France were 80% and in uh maze they were 90%.

[00:10:22]>> Okay. So one last thing what are you seeing from international consumers in wheat.

[00:10:27]>> So it's been an interesting past few days because there's been some focus on China. Mhm.

[00:10:32]>> Um, China is currently about to harvest or already harvesting in some of its provinces and the issue we've heard about is that there's been heavy rain, untonely rain, especially in the provinces of Hannon, which is the largest wheat province or or Anhoi.

[00:10:50]I hope I pronounced that right. Um, so those three provinces have got up to 8 to 10 million tons that could be at risk of quality downgrades because of that excessive rain at the wrong time. That's about 6 to 7% of the overall crop. So, we're going to have to wait and see. But already people are starting to think how is it going to affect >> China in terms of feed.

[00:11:15]>> If it means more feed wheat, is it going to mean competition for their own feed corn? And how is that going to impact their international tender demand, right? I.e. are they going to come to the market for quality wheat imports >> and are they going to be less present for for feed corn imports. So that in the context of the US China discussions could become important in the next few weeks as well. Um also we had some noise about Mexico over the past few days and um a lot of discussion about Mex what Mexico is doing. So, it feels like Mexico may be slightly worried about the quality in the US because of those poor winter wheat crop conditions. And there's been a lot of noise about Mexico potentially asking for pricing inquiries for EU and Russian wheat, uh, in particular French, German, and Polish wheat. Okay. Um, now >> it's been discussed at length over the past few days, but we haven't seen any confirmed buying.

[00:12:13]>> Okay.

[00:12:13]>> Um, no confirmation.

[00:12:15]>> No confirmation. Exactly. And then the last bit is the Mediterranean Vasin uh where we still have the same story with um Morocco uh Tunisia, Algeria, Egypt, uh Turkey and Syria having better crops.

[00:12:30]Uh we got some more information about Turkey. The crop is expected to be 25 to 27% better than last year. So again this sentiment that um the Turks may restrict import from June July um because they've got a better crop domestically. Now the last interesting bit is um Algeria though uh despite despite having a better crop, there's still some firms trying to bridge the gap between now and full harvest and we've seen some uh tiny private tenders like 7,000 tons of wheat there and there for June shipment >> and the market is also expecting a larger uh state tender um over the next one to two weeks uh for August shipment.

[00:13:13]>> Understood, Bert. Thank you so much for joining us and for all your insight and thank you to our viewers for watching.

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