USDA confirms China is buying even more U.S. soybeans. China agreed to buy another 1.199 million metric tons (MMT) this week. It's now listed at the 9th largest buy in 10 years and the biggest from China in more than a year. Last week USDA confirmed buys of 1.5 MMT.
"It's good to see China back in the market for our beans, but if it would have happened three or four months ago there was a lot more uncertainty in the market," says Nellinger. "Number one, we didn't know what our crop size was and we didn't know how South America's crop was going to progress."
Nellinger says today, that's less uncertain and it's taking some of the excitement out of the market.
"It's good to see China back in the market for our beans," says Nellinger. "Hopefully, at some point more buys beyond what was announced this week [are coming]."
The main headwind for soybeans prices remains the world stock situation.
"It's great to see China back but we've got a lot of beans to get rid of in the world," says Nellinger.
USDA latest report put U.S. soybean carryover at 955 million bushels.
"It's definitely a lid on the price and I think that's the big adjustment," says Nellinger. "Two years ago we were looking at a stock situation where we had a 20 day supply."
Nellinger says even if China comes back and buys two-thirds of what USDA has trimmed off its demand expectations, soybean carryover remains at 700 million bushels.
"Yes [China buying] is good and we can rally a little more," says Nellinger. "It's not something that is going to take us two dollars higher or back to where we were before the tariffs were announced."
Nellinger says getting back to $12 soybeans is probably only possible with a weather or drought issue this summer.
"This is going to take several quarters to get through the market and it's good to have China potentially back on the demand side," says Nellinger. "But, it's a different situation and a lot of beans to get through."