A Seasonal Opportunity?Submitted by PI Financial Corp on February 2nd, 2020
Grains have been trending higher on news Trump has offered to delay $250 billion in tariffs on Chinese goods.
China’s communication ministry indicated that Chinese firms were again inquiring for US agriculture goods, mainly soybeans and pork.
However, no purchases are confirmed as high tariff rates remain in place.
Brazilian soybeans for November are trading at 85 cents over Chicago, which does not come close to paying for the tariffs.
As for pork, China would be in a good position buying at the current US prices given their sharp advance in demand and fall in US prices.
I’ve read some traders are questioning if China was serious to show good faith why on a government basis they aren’t making any purchases.
There is some speculation that China’s soybean reserves are full ahead of harvest and they do not want to add to the supply.
I’m seeing opportunities possibly starting given a seasonal low that might be forming.
Wheat in particular may have found a bottom.
This is the time of year where farms may need to sell for storage or cash flow reasons.
If this is the case for your operation, you may want to consider replacement strategies.