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South central kansas | This is the first time I have read that China is going to change there course grain program, the following commentator thinks(among other things) that is having a impact on the market.
Grains Update: September 1, 2015 Darrell Holaday The weakness out of China continues to haunt these markets. The Chinese PMI index overnight was down again and the reaction has been extremely negative. Crude oil has given up yesterdays gains and is 3.50 lower. Corn is down .06, soybeans down .17 and wheat down .02. The weather models have turned wetter for next week and into the next weekend. That has added to the pressure. But most of the weakness is Chinese concerns. Why is there so much concern about China? USDA expects China to buy 28 million tons of US soybeans in the 15/16 crop year. The concern is that that they are way behind recent years pace where they total has been 27-28 million tons. The chart below illustrated how far behind 15/16 sales to China are compared tothe same point the last five years. The question is are they slow because of their slowdown in terms of economic growth or because they have purchased such large volumes from South America. The reality is that is that both factors are causing the decrease. We talked 3 weeks ago about the change in the coarse grain program in China. Currently, the government provides high price guarantees for corn, sorghum and barley. This has resulted in large volumes of imports and the government has grown tired of very burdensome supplies. We indicated they were headed to a program of lowering the guarantee prices and then providing a direct payment toproducers for a subsidy. Most indications were this would occur next year. But there are some indications that plan is on a faster track. This would lower corn values significantly. In addition, this would likely result in pork and poultry rations changed slightly with 5-10% less soymeal. Currently corn is overpriced in China compared to soymeal values. The latest GFS has also put some moisture in Indiana in the next 48 hours. It is a limited amount but indicates .25 -.50 range. But the moisture next week is the market that is pressuring the market.
Edited by zenfarm 9/1/2015 21:23
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Market gutting?
