Grain markets on Thursday reacted to “feel good” news coming from Twitter.
The U.S. Department of Agriculture’s (USDA) weekly Export Sales report usually takes precedent on Thursdays. However, the markets found good news earlier in the day on Twitter. Brian Grossman, market strategist for Zaner Ag Hedge, shares what bumped soybean futures 33 cents higher at midday Thursday.
“We had Trump talking about a phone conversation he had with the President of China,” Grossman said. “According to his tweet, he is saying that it was a good, constructive meeting and (that) they are still planning to have face-to-face meetings at the G20 Summit later this month.”
President Trump’s tweet reiterated what we already know – the United States and China continue to discuss trade relations and plan to meet at the G20 Summit. Grossman says while “positive,” the tweet did not provide any sign of an of a new agreement.
“There has been no trade agreement; there has been no details. The underlying problem is still there without some sort of trade agreement. That problem is we have way too big of a supply, and export sales this morning were not supportive at all,” Grossman said.
Analysts lowered their expectations ahead of Thursday’s report. Grossman describes the expectations as “pitiful,” and yet sales still fell short.
Soybean export sales came in short of analyst expectations, at 395,000. Soy meal and soy oil export sales were “good,” coming in at 320,000 and 22,000, respectively. Corn also came in below analyst expectations, at 394,000.
Grossman says, “All-in-all, the fundamentals aren’t supportive.” However, he believes progress on the U.S./China front could realign the market’s position.
“Depending on what kind of headway we make, it could be massive,” Grossman said. “If we get a good trade agreement and find out China is going to buy more soybeans than what they normally have, we could easily see this market recover back up to prices we were at. But, it will take time to chew through this massive backlog we have.”