Recent weeks full of rumors, confirmation and headlines have given everyone a lot to talk about but surprisingly, left the markets somewhat directionless.

Many were confused as to why recent news of Chinese purchases was not immediately bullish to the market. It is important to remember a couple things. First, prior to the trade rift, we were shipping 30-35 million metric tons (1.1-1.3 billion bushels) to China a year, so while any purchases are a great first step in rebuilding the trade relationship we so desperately need when faced with a tremendous amount of on-hand supplies, we definitely need to see more.

Secondly, commodities tend to trade on what could happen, so many times the old adage of buying the rumor and selling the fact is tough to break. We have seen a significant run-up in value first on the expectations the Trump/Xi meeting would take place and be a positive development and then on the idea of the trade truce and subsequent purchases. Many of the folks that were interested in buying before that news already had prior to any type of confirmation.

Interesting to also see reports China will be looking to buy U.S. corn for the first time in several years. Talk is up to 3 million metric tons (118 million bushels) will be booked as soon as next month. Considering both the USDA and the Chinese government raised on-hand corn supplies in the November report by several billion bushels, the idea China will need corn sooner than later is intriguing.

In other Chinese news, soy processors there are losing nearly $50 per tonne. This is the worst margin in 18 months as weakened feed demand and higher input prices are creating a pinch. The weaker feed demand outlook is likely being driven by both the desire to include less protein in rations as a way to reduce soybean demand and from the historic spread in African Swine Fever.

As we’ve discussed before, ASF is incredibly deadly to hogs and has been spreading across the country like wildfire. Rumor has it China is seeking to reduce small hog farms in an attempt to stop the spread. A news story surfaced recently that China will close all farms with 500 pigs or less in the Beijing region, buying each hog for $170 regardless of weight to be culled.

The USDA updated its monthly supply and demand numbers earlier this month, leaving almost everything unchanged when it comes to both supply and demand. The largest adjustment was to corn used for ethanol, with a 50-million-bushel reduction from last month’s numbers. A slight adjustment lower in wheat exports was seen, as well.

We’re watching weather closely as a significant portion of Brazilian bean production is dealing with hot and dry conditions. At this point, most crops are handling the shift in weather well and we are looking forward to a wetter forecast. Argentina is too wet in some areas, while Australia has been struggling with drought only to have heave rains come into play as wheat harvest begins.

Russia was expected to hold a wheat exporter meeting Dec. 21. Some felt this could lead to an announcement of wheat exports being curbed, though this expectation has been discussed for many months now with no real indication of a slowdown.