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Tim Hannagan: China buys eyed

Agriculture.com Staff 01/19/2011 @ 2:53pm

We started the week, Tuesday, with our Monday weekly export inspection report, delayed one day. 

Wheat inspected for near term export came in at 21.6 million bushels, down from 25.5 the week prior and over our four-week average of 18.5. Not a good demand number on the week. But, Tuesday's trade suggests that some panic-buying set in. 

Australia announced over the weekend that continuing floods have created their worst economic disaster ever. Rails that ship grains from field-to-port are underwater and may be out of service for three months. That  essentially takes them out of the near term export scenario, as by mid-April people will be talking about U.S., Canadian and European winter wheat coming to harvest in May. Well, this had Algeria and Turkey enter the world market for 775,000 metric tons of wheat, as there's no guarantee that spring foreign ports will have any better production. 

We saw panic-buying when the Russian drought hit, but it faded fast as world supplies were big. The US and world ports have no shortage of wheat yet, so panic-buying seems a stretch, but let's watch demand closely. 

Corn inspections were to 20.5 million bushels versus 21 the week prior and four-week average of 32. We need 30 to 39 to be friendly and 40+ bullish. So, not a good demand number. 

Bean inspections were 43.1 million bushels, up from 38.7 the week prior and four-week average of 31.5. Good number, with China in for 25.6 of the total and a increase for them the second consecutive week. 

China's buys may be weather related, as Argentina saw good weekend rains with more expected Wednesday. This had us close lower Tuesday. But, WXRISK.COM the weather site sees a heat dome into the weekend and hotter and drier conditions into months end. 

While corn is finishing key yield development time, soybeans are getting started. Though futures traded the rain in front of it, China's trading the long-term uncertainty. Beans went from trading bearish weekend weather with Tuesday's lower close to the long-term bullish weather on a higher opening Wednesday. 

But, Wednesday was a little stronger, after the opening, on a reminder the Chinese bosses are in Washington this week cutting trade agreements. On Thursday, they are expected to sign another grain deal for long term purchases. That can't be bearish, but will there be any surprises? Two years ago, when they were here and signed the last trade agreement, it was also announced that day they purchased 2 million metric tons of beans. Some will wonder if a similar huge purchase will occur again. The surprise could be they walk away with a big corn purchase as 2011 is to be potentially China's biggest corn purchasing year. 

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