Grains are trading lower on the overnight session.
The buzz of the fresh Chinese soybean purchase wore off quickly Monday, as grains could not hold on to overnight gains. Corn struggles to find fresh news as it has been range bound for weeks. Corn consumption for ethanol declined in January by 16 million bushels versus the same time a year ago. For the marketing year, ethanol grind is down about 3%. This could reduce corn for ethanol usage by 125 million. If corn exports continue to weaken as they have in recent weeks during the 3rd quarter of the marketing year, ethanol and exports could potentially add to what was a tightening carryout that supported higher corn values.
Soybeans were not able to sustain the rally from Friday’s announcement of China’s commitment to buy another 10 million metric tons of soybeans. China has purchased 75% of the initial 10 million metric tons they have agreed to purchase since trade negotiations started. However, only 2 million metric tons have shipped. As the calendar gets closer to March, cheaper South American soybean stocks will grow in ports becoming available to Chinese importers. Friday’s announcement of more purchases may not ship until new crop having very little effect on old crop carryout.
Market Movers: Chinese trade negotiations, acreage debate and export business.
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