What Are The Chinese Up To?
The markets took a hit last Thursday, and are lower again today, on the back of the news that China was to sell assorted quantities of corn, wheat and soybeans out of it's strategic reserve.
Does that mean that China has more than enough stocks and is looking to offload a few million tonnes, or could there be another explanation?
You know I love a good conspiracy theory.
They certainly seem to keep coming back for more US soybeans. Last week on the very day China announced the sale of 500,000 MT of soybeans sending the market tumbling, Chinese buyers actually were reported to have booked 636,200 MT themselves in the USDA's weekly export sales report.
This Thursday we will doubtless find out that they've bought more, taking advantage of last Thursday's 44 1/2 cent drop in August beans.
They are unlikely to find a huge queue of buyers at asking prices $40-50 higher than current US levels, and if they do find some takers then why not let them have some beans that have probably been sat in store for a couple of years and replace them with some nice shiny new crop ones?
Selling off a ruck of old crop beans has other advantages too. It makes China look better in the eyes of the WTO, rather than just being a buyer and hoarder of grains they become a world 'player', supplying their needy Asian neighbours.
Meanwhile they keep smiling whilst exchanging their devaluing dollar-based foreign exchange reserves for something more desirable - fresher, better quality US beans.
Does that mean that China has more than enough stocks and is looking to offload a few million tonnes, or could there be another explanation?
You know I love a good conspiracy theory.
They certainly seem to keep coming back for more US soybeans. Last week on the very day China announced the sale of 500,000 MT of soybeans sending the market tumbling, Chinese buyers actually were reported to have booked 636,200 MT themselves in the USDA's weekly export sales report.
This Thursday we will doubtless find out that they've bought more, taking advantage of last Thursday's 44 1/2 cent drop in August beans.
They are unlikely to find a huge queue of buyers at asking prices $40-50 higher than current US levels, and if they do find some takers then why not let them have some beans that have probably been sat in store for a couple of years and replace them with some nice shiny new crop ones?
Selling off a ruck of old crop beans has other advantages too. It makes China look better in the eyes of the WTO, rather than just being a buyer and hoarder of grains they become a world 'player', supplying their needy Asian neighbours.
Meanwhile they keep smiling whilst exchanging their devaluing dollar-based foreign exchange reserves for something more desirable - fresher, better quality US beans.