Grain Futures Decline on Lack of Chinese Purchases and Black Sea Headlines

Grain futures declined on Wednesday due to geopolitical headlines and possible positioning ahead of the US-China Summit. According to Alan Brugler of A&N Economics, the market had anticipated some buying from China as a goodwill gesture, but this did not materialize. The corn and wheat markets were particularly disappointed, with the $17 billion ag commodities deal still unconfirmed by China.

U.S. Trade Representative Jamieson Greer stated that China has already purchased $4 billion of the agreed-upon total, but it is unlikely they will provide a list of specific commodities and amounts due to concerns about driving prices higher. Brugler noted that this would be a strategic move, as announcing such purchases could make them less effective.

The market also reacted to rumors that China was buying corn futures, similar to their soybean purchases last year. However, it is difficult to determine if these are actual purchases or simply the lifting of shorts. Historically, China has not bought significant amounts of corn from the US, except in a few years when they had large moisture damage issues.