Home News Michigan Ag News China Purchasing U.S. Grains to Rebuild Stocks, Feed Livestock

China Purchasing U.S. Grains to Rebuild Stocks, Feed Livestock

On Wednesday, USDA announced 34 million tons of soybean sales to China and unknown destinations. While the market did close higher, it was only a few cents.

According to Rick Hollister of The Andersons, says the reason it didn’t have a “dramatic impact” was because they weren’t for immediate shipment.

“Our old crop year finishes the end of August, so getting 15 percent of these new sales on a daily basis or every other day says quite a bit about the demand for protein,” he said.

These consistent sales of soybeans gives everyone who exports to China an opportunity to participate.

“You don’t know when it may stop—it’s all out to the new crop, so it seems there are some questions whether it’ll come out of the U.S., whether it’ll happen or not,” said Hollister. “It’s good to see these every other day and good activity every week in soybean sales.”

Wheat finished higher on Wednesday as well, mostly on rumors of Chinese purchases. Hollister said global demand for wheat is starting to increase in response to lowering world wheat production.

“We continue to downgrade the Russian, European soft wheat crops, and Germany and France continue to struggle yield-wise,” he said. “Wheat is still the largest feed grain used to feed livestock in the world, so it definitely makes a difference and it makes a difference in corn demand.”

Hollister said that Chinese corn prices are up between 20 to 25 percent compared to January 2020. That is on contributing factor to why they purchased a lot of U.S. corn. The second is burning through their stocks.

“It feels like they’re back to needing to rebuild or they have a desire to get their current stocks built back up again,” he said.

Hollister talks about ethanol demand and the weather forecast in the full conversation above.