Rumors of China purchasing U.S. soft red wheat supported the market on Wednesday, and the nearby contracts rallied more than 20 cents.
According to Rick Hollister, grain merchant with The Andersons in Hemlock, says that China will occasionally purchase U.S. wheat, but he’s not sure what this purchase means.
“They have been trying to improve their production inside their country, and they had some areas that have struggled with wheat production this year,” he said. “We don’t always get a chance to do wheat business with China, so it’s a positive for sure.”
Earlier this week, China made it’s largest one-day purchase of U.S. corn in history, and they have made a few soybean purchases as well. This week’s corn trade never had a strong reaction to the news.
“For as much as wheat’s trying to pull up corn, it’s unresponsive,” said Hollister. “Even though it was a big one-day sale, it’s been anticipated, and it’s for the new crop. It’s not something that’s going to immediately impact our stocks this summer, this year. It could not even happen until next spring or a year from now.”
Hollister said it’s a benefit to be able to do that business, but it’s a long range.
“If you followed it up with some consistency in China buying corn from the U.S., it would be more helpful,” he said. “There are a few folks that are optimistic about what we might be able to sell to China during this new crop cycle—as big as we’ve seen since 2013/14.”
Hollister talks about the long-term weather forecasts underpinning the soybean market and wheat harvest in Michigan in the full audio above.