All three major crop futures were sold ahead of last week’s WASDE report and Friday’s trade deal announcement. The combined short in soybeans, corn and wheat reached 216k lots, the biggest seasonal short in two years. Just before the trade deal announcement helped force short-covering across the sector. However some skepticism remain with the market struggling to see how China can buy $50 billion worth of agricultural products. Especially when Trump refers to the volume as being on an annual basis. During the past 24 months China bought $52.4 billion worth of U.S. produced soybeans, crude oil, LNG, pork, cotton, maize, wheat and sorghum.
The emerging consensus for a global deficit next year in both sugar and coffee helped drive another strong week of buying. Six weeks of sugar short-covering was topped last week when speculators bought a record 80k lots to cut the net-short to just 15k lots, a one-year low. Eight weeks of Arabica coffee buying lifted the net long to 29k lots, a three year high. While the fundamental support remains, not least in coffee where Brazil is reported to run out of reserves, the aggressive buying has however increasingly left both contracts exposed to profit taking.