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3 Big Things Today, June 3, 2020

Soybeans, Wheat Higher Overnight; China Rhetoric May be ‘Sabre-Rattling.’

1. Soybeans, Wheat Higher in Overnight Trading

Soybeans were higher in overnight trading on confirmation that China purchased U.S. soybeans.

The USDA said in a statement yesterday that the Asian country bought 132,000 metric tons of soybeans. The purchase was announced amid reports that China would stop buying U.S. agricultural products.

Wheat futures were higher in overnight trading on reports of unfavorable weather in Australia, though other growing areas are facing more favorable conditions.

Australian wheat and canola regions are expected to be dry in the next 10 days, increasing moisture shortages in the eastern third of the country’s Grain Belt, forecaster Commodity Weather Group said in a report.

The weather in Argentina also will be mostly dry, which could increase shortages of precipitation in the South American country.

Still, some parts of Ukraine and Russia will see rain this week, and warm, dry weather in the U.S. Southern Plains likely will help winter wheat mature, CWG said.

Soybean futures rose 3¼¢ to $8.53¾ a bushel overnight on the Chicago Board of Trade. Soy meal futures gained 80¢ to $284.50 a short ton, and soy oil rose 0.11¢ to 28.05¢ a pound.

Corn futures fell 2¢ to $3.22¼ a bushel overnight.

Wheat futures for July delivery gained 2¼¢ to $5.10¼ a bushel, while Kansas City futures rose 3¾¢ to $4.54½ a bushel. 

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2. Threats to Halt Agricultural Purposes by China May Just Be ‘Sabre-Rattling,’ Commerzbank Says

Demand for agricultural products are at the fore as rhetoric between the U.S. and China ramps up, but whether the Asian nation will halt purchases as reported earlier this week or not is in question.

Several reports indicated that China wanted to halt purchases of U.S. agricultural goods including soybeans and pork. The USDA on Tuesday, however, said China purchased 132,000 metric tons of U.S. beans.

Commerzbank analyst Michaela Helbing-Kuhl said in a note to clients that it appears that any threats from Beijing to stop buying U.S. goods is little more than “sabre rattling.”

“After all, China will be keen to keep its supply of soybeans open and secure,” she said.

The Phase One deal signed by the U.S. and China – the world’s two largest economies – in January hasn’t lived up to the hype. While some of that could be blamed on the COVID-19 pandemic, there are other factors at play, Helbing-Kuhl said.

Under the terms of the trade deal, the Asian country was supposed to increase purchases by $32 billion over 2017 levels this year and next, but only bought $1 billion worth of soybeans in the first quarter.

“Nonetheless, the U.S. side officially still has high hopes. The (USDA) expects soybean exports in the coming 2020-2021 season to rise by about 10 million tons as compared with the two previous years, which is unlikely to be possible without substantial Chinese demand,” Helbing-Kuhl said in her report.

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3. Severe Thunderstorms Forecast in Parts of Southern Plains, Northern Indiana

Thunderstorms are possible in parts of the Southern Plains where hard red winter wheat is maturing, some of which could be severe, according to the National Weather Service.

Hail up to 2 inches in diameter is expected along with winds topping 60 mph, the NWS said in a report early this morning. Heavy rainfall also is in the forecast.

The storms won’t stop tonight, as precipitation, strong winds, and more hail are possible tomorrow into tomorrow night, the agency said.

Farther east, storms are likely in parts of northern Indiana and southern Michigan, some of which also may be severe. The harsh weather is expected to continue as the weekend approaches, the NWS said.

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