Commodity Markets
China’ s Silent Hand
This is where the market gets even more interesting. The latest“ deal” drawn up between the U. S. and China in the trade war that has been ongoing since January 2018 concluded with a great deal of fanfare and boastful statements from the U. S. side.( Though this time, at least the U. S. president didn’ t tell producers they would have to work overtime to fill all the demand coming from China.) However, there were again a couple of interesting caveats that took some of the lustre from the bluster. First, as usual, China could buy from the most competitively priced market, with no requirements for purchasing U. S. supplies. Second, China could fulfill its end of the“ deal” by buying futures contracts rather than physical bushels of U. S. soybeans. What a great“ deal”, right?
Let’ s go back to the daily chart for the January futures contract. On September 30, the January issue showed open interest of 179,390 contracts. Through November 13, that number had grown to 384,535 contracts, an 11 % increase, meaning open interest more than doubled. Given the data we have on hand as of this writing( late November 2025), all indications are that Chinese interests were buying soybean futures contracts rather than physical U. S. supplies, just as the“ deal” allowed, doing the U. S. industry little to no good. But, that being said, we need to continue to monitor WESS, as it is possible, even likely, that cash sales to China will start appearing.
Seasonality and Supply Squeeze
What makes me say that? First, the seasonality of the global market. Given it is springtime in South America, China’ s main supplier— Brazil— is likely starting to run tight on supplies until the next harvest comes around in February and March
( possibly as early as January). Seasonally, this is when China covers some of its secondary supply needs, and the U. S. has just refilled its bins with the latest harvest.
However, this time around the calendar, U. S. soybeans at the Port of New Orleans are higher priced than those at Brazilian ports, making Brazil still the more competitive market. Therefore, if Chinese merchandisers were buying futures as hedges, once new purchases were made of Brazilian( or Argentine) soybeans, those futures contracts would be sold again.
Lastly, late November did see some announced sales of U. S. soybeans to China. The third week alone saw daily announcements totaling 58 mb. For comparison, by the end of November 2024, China still had 137.5 mb of U. S. soybeans on the books.
About the Author
Darin Newsom has been working with markets in general for nearly 40 years, dating back to Black Monday 1987. Over that time, he has worked in local grain elevators, first dumping trucks then as a merchandiser, before becoming a commodity broker and advisor. That eventually led him to DTN where he spent 15 years as the company’ s senior market analyst before going out on his own with Darin Newsom Analysis, Inc.
These days, he also has the title of senior analyst for Barchart. Along the way, he has developed his own way of analyzing markets in every sector, always proudly reminding people that he is not an economist.
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