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China reiterated a pledge to boost domestic grain production, including corn and soybeans, to ensure adequate domestic supplies amid heightened volatility in global food markets, the South China Morning Post reported Wednesday. China’s grain supply is expected to come under growing pressure from rising demand in coming years, while the country remains dependent on overseas soybean supplies, the report noted.
Zhang Zhu, China’s minister of agriculture and rural affairs, said Tuesday that China will raise grain production capacity by maintaining acreage levels and boosting yields, targeting capacity at 725 million tons by the end of 2030, stepping up corn and soybean production in particular. The report said he noted that while staple grain supplies were ample, feed grains such as corn remained relatively tight and China continued to rely on imported soybeans for edible-oil production and livestock feed.
- “As overall grain demand is expected to keep rising, supply and demand will remain in a tight balance, meaning the string of food security must always be kept taut,” Zhang said, according to the report.
Grain Stocks rock corn market: USDA’s quarterly grain stocks report lived up to its reputation for sparking market volatility. USDA pegged corn stocks at 2.095 billion bushels, above the top end of estimates and 177 million bushels above the average pre-trade guess. That sent corn sharply lower, dragging on corn and wheat, which both saw stocks come in below the average forecast.
End-of-the month and end-of-quarter position squaring also contributed. Report Reaction: USDA shows 2025/26 corn ending stocks above 2-billion bushel mark
Market recap: The bearish stocks figure proved to be the straw that broke the camel’s back after a shaky performance by the corn market over the past week.
- December corn fell 21 ¼ cents to $5.00 ¾, hitting a five-week low,
- November soybeans lost 4 ¾ cents to end at $12.93.
- December soft red winter wheat finished 17 cents lower at $6.75 ¾, hitting a six-week low.
- December cotton followed Tuesday’s limit-down tumble with a loss of 34 points to 78.52 cents, scoring a nine-week low.
- December live cattle rose $1.90 to $222.70, hitting a two-week high. November feeders were up $3.40 to $334.30, hitting a nine-week high.
- December lean hogs fell 27.5 cents to $69.425.
Weak China feed demand? Meanwhile, Reuters reports that China’s soybean buying is likely to slow in the months ahead due to weak demand for animal feed and negative crush margins, which leaves little room for U.S. cargoes after last week’s U.S.-China summit meeting excluded soybeans from tariff relief. The report said private oilseed processors in China, the world’s largest soybean importer, have covered most of their needs through the Lunar New Year in early February with supplies from Brazil, Argentina and state reserves. A 10% tariff on imports of U.S. soybeans makes the U.S. crop uneconomical for private buyers. Chinese state-run companies have bought around 13.7 million metric tons of U.S. soybeans, the report said, citing Asia-based traders, while private crushers have taken only South American shipments.
Inflation cools, rate-hike odds fall: The August personal consumption expenditures index rose 0.3%, for a gain of 3.4% over the last 12 months, slightly slower than expected, with the annual rise unchanged from July. Core PCE, the Fed’s favored inflation gauge, was up 0.2% in August and up 3% year over year, matching July’s revised rate and the slowest since December. The reading saw traders back off expectations for a rate hike at this month’s Federal Reserve meeting. Fed funds futures traders have priced in a 37.1% probability of a quarter-point hike on Oct. 28, down from just over 50% on Tuesday and more than 70% a week ago, according to the CME FedWatch Tool. Traders have fully priced in expectations for at least one more quarter-point hike by year-end and further tightening into next year.
- With inflation still well above the Fed’s target [of 2%] and progress on disinflation slow, it does little to tilt [Fed policy makers] away from their hawkish posture over coming months,” said Michael Pearce, chief U.S. economist at Oxford Economics, in a note. “However, we think markets have gone too far in pricing 90 basis points of rate hikes over the coming year.”
Relentless rate rise continues: Cooler rate-hike expectations put pressure on the short end of the Treasury yield curve, which is sensitive to policy expectations, and saw the U.S. dollar pull back from a two-month high. But long-term rates continued their historic climb, with the yield on the 10-year Treasury note – the most important rate benchmark in the world – rising to 5.304% to hit its highest level since 2004, according to the Wall Street Journal. The rise came after data showed U.S. gross domestic product rose at a 2.2% annualized rate in the second quarter, up from an earlier estimate of 1.5%. Signs of a strengthening U.S. economy are one factor helping to drive yields higher. Less benign reasons for the surge include fears that soaring fuel prices are feeding future inflation pressures as well as concerns around burgeoning government debt levels around the world.