We talked last week about using the rally to reduce risk, just in case the bulls became irritated or bored with the lack of headlines. There's very little fresh or new being released in regard to U.S. and Chinese trade talks. That which is being circulated has turned more towards doubt and pessimism than resolution and optimism. Senator Chuck Grassley's recent comments added a bit more uncertainty.

I personally want to remain optimistic, believing U.S. leaders will be able to negotiate some type of deal with the Chinese in regard to U.S. agriculture. To this point most inside the trade estimate the Chinese have purchased around 5 million tons of U.S. soybeans from the 2018 harvest. For comparison, in 2017 China had booked just over 23 million tons of U.S. soy, by this date. Let’s keep in mind, there's also continued headlines about African Swine Fever spreading across China and talk of close to 1 million hogs having been culled to this point trying to slow the spread. Chinese soy demand has been under pressure and prices are weak as hog margins are pressured. Bears are also pointing to a somewhat improved forecast for South America. Yes, there are still pockets of concern in both Argentina and Brazil, but it seems as if the headlines have tampered back as of late. I am keeping a close eye on conditions in northeastern Brazil as they may continue to struggle.

There’re also areas in Argentina, especially in northern Buenos Aires and southern Santa Fe and Cordoba that are still battling too much rainfall and need to be monitored. But the bottom-line is the fact Brazilian soybeans are now being harvested and prices are starting to move lower. The market is wondering if we have somewhat missed our window of opportunity?

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