July 18, 2024
A Month After Xi Jinping Meets With Iowan Farmers, China’s Outsized Impression 
On US Commodity Markets Is Made Clear …

Huge Buy

Between October and mid-December 2023, China bought a large quantity of wheat, totaling 60 million bushels. This included a record-breaking weekly complete of 55 million bushels. This surprising improvement occurred when U.S. wheat costs had lately hit multi-year lows. Regardless of preliminary indications of a record-low yr for U.S. wheat exports in 2023/24, China’s sudden purchases are anticipated to enhance prospects within the face of sturdy competitors from different exporting nations.

Why Now?

China, coping with problems with wheat high quality on account of premature rains throughout harvest season, is projected to be the highest international wheat importer in 2023/24. This has led to elevated international demand for inexpensive wheat.

Value Motion

Market gamers took a major internet brief place on U.S. wheat contracts in late 2023, exacerbating downward worth traits. The latest uptick in Chinese language purchases might sign a reversal, probably assuaging downward stress on wheat costs. Whereas not guaranteeing a rally, it suggests a shift within the U.S. wheat market.

Agricultural Diplomacy

China’s affect on the US Agricultural market is evident. However worldwide buying is all the time in flux and it’s vital to maintain up relations. Final month, throughout APAC – the Asia-Pacific Development Convention – China’s President Xi Jinping met with Soybean farmers representing their pursuits. The representatives got here from the Iowa Soybean Affiliation (ISA) and advocated for China to extend its imports from the US.

China performs a pivotal position because the main international soybean market, importing 60% of all internationally traded soybeans and round 30% of the annual U.S. soybean manufacturing. The importance of sustaining this relationship is essential for each nations.

Alternatives For Buyers

Understanding the affect China has on US agriculture is vital for buyers trying to get entangled. Particular person buyers can get entangled within the commodities markets by buying and selling futures, however this could be a difficult observe out of attain of many buyers. Even for seasoned merchants, pitfalls abound.
One other various is investing in a commodity ETF, like these provided by Teucrium Funding Advisors, LLC. The agency affords a bunch of agricultural funds rigorously curated to present buyers easy, liquid entry to commodities, funds like Teucrium Wheat ETF (NYSE:WEAT) and Teucrium Soybean ETF (NYSE:SOYB).

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