If anyone had doubts that China has been on a mission to rebuild grain inventory, not to mention take advantage of a profitable spread between domestic and international prices, that should be dispelled with the September import figures. During the month, corn imports were up 675% from a year ago, wheat up 585%, barley up 57%, and sorghum up 356%. Of course, we know that they have drained down pork inventories in the past year in an effort to temper prices, and during September, they imported 380,000 MT, which was 122% above 2019. Of course, the question in the mind of every trader around the world is, will this continue? Needless to say, those in the know in China are not sharing that information.
The hot and dry weather that has plagued Argentina until the past couple of weeks has prompted the Buenos Aires Grain Exchange to lower their wheat estimate again. They are now expecting a crop of 16.8 MMT, which is down from last month’s estimate of 17.5 and the original for this year of 21. With the improved moisture as of late, most are holding out hope for good corn and bean crops. One additional note from Argentina this week. In an effort to stave off domestic inflation, not to mention save face for mismanagement of the economy, the government stubbornly refuses to devalue the Peso, even though their bonds market, just about every economist around the world and the black market for the currency says it will happen. The official exchange rate set by their central bank is 77 pesos to the dollar, while on the black market, it has sunk to as much as 190 to 1. An official devaluation is inevitable and will be the seventh time they have been required to do so in the past 20 years. This would appear to be a situation of damned if you do, damned if you don’t.
Looking across the Atlantic, we find that corn harvest has now moved up to 77% complete in France. This was an increase of 13% for the week and brought them to 35% ahead of last year at this time. That is allowing farmers to make good progress with planting winter crops. Soft wheat planting is 45% complete, compared with 27% last year, winter barely is 60% complete, and durum wheat 5%.
We do have one more export sale reported to wrap up the week. Mexico purchased 100,000 MT of corn. China is notable for its absence as of late.
We have not taken a peek at the combination corn, wheat, and bean chart as of late, so probably not a bad way to wrap up the week. We are now into the fifth month in a row of rising prices and, during that period, have moved from the extreme low end of the price range for the past six years to the other end of the spectrum. Has the fundamental paradigm shifted enough to carry us beyond this upper end? It would seem the answer to that resides in the Middle Kingdom, and as I already mentioned in the first paragraph, they are not sharing that information with the rest of us just yet.
