Bevan Everett Grain Recap Chinese Report 061026
Bevan Everett Grain Recap Chinese Translation
Grains Team Asia - Bevan Everett Chinese Translation
- Grains & Oilseeds
Perspective: Mid-Day Commentary for May 20
By: Mike Castle, Market Intelligence - Fertilizer Analyst
May 20 – In broad strokes, stocks are up and commodities are down at mid-day, a common theme in recent months as managed money flows in-and-out of the respective sectors in response to rapidly developing headlines. The tech-heavy Nasdaq is leading the way higher today as the market gears up for chip giant Nvidia’s much anticipated earnings after the close. The VIX remains relatively muted, falling through the session to hang around 17.8 at the time of writing. The dollar is slightly in the red, holding in a tight range over the last four trading days, as it sits right around 99.13 at midday. Treasuries are also in the red after pushing to fresh highs yesterday, with 10-year yields at 4.58% and 2-year yields trading just below 4.05%. Crude oil is sharply lower today in response to more headlines of potential peace between the U.S. and Iran, with nearby WTI down 6.3% to trade near $97.40 at the time of writing and nearby Brent futures down 6.0% to trade near $104.60 at the time of writing. This is despite a dramatically sharper than expected 7.86 million barrel week-on-week decline in U.S. crude oil stocks, the largest weekly draw seen since the start of the war. The ags are squarely in the red effectively across the board, a victim of today’s broader commodity sector selloff.
Total mortgage applications in the U.S. fell 2.3% week-over-week in the week ending May 15th, reversing course from the 1.7% gain in the week prior and dropping the overall MBA Mortgage Market Index to a five-week low. The drop was largely driven by a 4.1% week-over-week decline in applications for new purchases, along with a slight 0.1% decline in refinancing applications. This coincides with a 10-basis point weekly uptick in the average 30-year mortgage rate to 6.56%, the fourth consecutive weekly increase to now sit at a seven-week high. For context, this is up from the recent trough of 6.09% seen back in late February, tracking the surge in 30-year treasury yields seen over the span.
Following last week’s Trump/Xi summit, China’s Ministry of Commerce today released an official statement noting that “both countries agreed in principle to discuss a framework for reciprocal tariff reductions on products of equivalent value under a trade council mechanism, with each side covering goods worth at least $30B,” per the Wall Street Journal. Obviously, the big question on everyone’s mind is whether or not the $17B commitment of non-soy ag products announced by the White House over the weekend will come to fruition. Today’s statement did not mention the $17B figure or say what products could be included in such a deal. This is very common, however, with China typically keeping their language more ambiguous to maintain flexibility—look no further than the 12 million metric tons of soybeans that China never publicly acknowledged commitment of but did eventually buy.
So, what are the most likely products to be included to reach that figure? Below is a look at the average annual value of non-soy ag exports to China from 2021-2023; I chose that span because the average value for those years was $17.5B, almost exactly in line with the alleged $17B commitment. It’s also necessary to point out how anomalous this stretch was—the average non-soy ag export value from 2010 – 2020 was only $8.7B and fell to $5.3B in 2025. Soy and soy products have on average accounted for over half of the dollar value of U.S. ag exports since 2010, but let’s keep the focus on the non-soy side for this breakdown.
The six categories shown in the graphic below are the ones that saw average annual value of at least $1B from 2021 – 2023. “Corn & Corn Products” is the top category—that includes not just corn itself, but also DDGs, ethanol, etc. That category has seen the largest single annual value of any non-soy ag export category in recent history, coming in at $5.1B in 2021. The second largest category was “Cattle, Beef, & Bovine Products.” Given the tight supply and high prices already being seen in the domestic market, that doesn’t feel like the biggest opportunity today. “Cotton & Cotton Products” comes in third, with a recent high of $2.8B in 2022—that was the highest in a decade, dating back to the $3.4B seen in 2012. “Coarse Grains & Products Excluding Corn” is the next one—this is where milo (grain sorghum) falls, which is likely one of the biggest areas of opportunity. After that is “Swine, Pork, and Swine Products,” which may prove difficult to find footing in given the saturated condition of China’s domestic pork market today with consumption growth never fully recovering from their African Swine Fever outbreak. Lastly is “Miscellaneous Feeds & Fodders,” which is where hay, composite feeds, and pet foods fall. Taken together, the opportunity appears real, but the market is still searching for clarity on which of these categories can realistically absorb enough volume to make a $17B target achievable.
- Grains & Oilseeds
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