AUDIO: Brian Grossman, Zaner Group
The United States Department of Agriculture?s weekly export sales report indicates China has recently cancelled commitments to purchase United States soybeans. Bunge, LTD. chief executive officer Soren Schroder told Bloomberg on Thursday, ?They?re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S.?
Zaner Group market strategist Brian Grossman says news of China?s decision to stray away from United States soybeans is nothing but ?a very cute play to try and scare the market.?
?It is nothing beyond fear-mongering,? Grossman said. ?Unfortunately the markets are made up of emotion, and that?s what drives the day-to-day events. They?re trying to play on that emotion right now. Yes, China stopped buying our soybeans. This time of the year, China almost always stops buying our soybeans. The question is, ?Will they start buying them again in September???l
Grossman has reason to believe China will buy U.S. soybeans come September.
?It really comes down to: ?Is China willing to potentially short their population on food in order to snub their nose at us?.? Another broker told me years ago, ?A hungry population overthrows governments.? China?s not stupid. I believe this was fear-mongering beyond anything else. I don?t expect China to starve their population (or) to stop buying U.S. soybeans. They will be hungry, and given the current situation (with) what happened in South America and, we are likely going to be the only market they can turn to,? Grossman said.
Grossman admits, grain markets reacted dramatically to Thursday?s news. However, he says the impact throughout the remainder of the marketing year will be minimal.
?For now, we?re taking a bit of a setback here in grains,? Grossman said. ?Yesterday (Thursday), soybeans had a nice recovery. Today (Friday), it looks ugly on the board. We?re really undoing a lot of what yesterday did. From a technical point of view, a lot of these markets are getting overheated, so a pullback would be justified, in my opinion. I wouldn?t be getting anymore nervous now than I had been previously. If anything, just take a breather along with the rain showers and be prepared to make sales when that next rally does come.?
