China Wants to Cut Out the US and Push for Ag "Self-Sufficiency" - What's Possible?? (Charts)

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🌏 China Grain & Soybean Strategy Update
China is pushing to reduce its reliance on grain and soybean imports in the name of food security. State media says Beijing plans to boost domestic grain and oilseed production through better seed quality, upgraded machinery, and more advanced farming practices. Trade tensions with the U.S. have accelerated this shift toward ag self-sufficiency. China also plans to support farm incomes, protect migrant worker employment, and extend rural land-use contracts by an additional 30 years after 2027.
China’s grain production hit a record high this year, rising 1.2% to 714.9mmt. Corn and wheat self-sufficiency looks achievable, but soybeans remain a much tougher challenge.

📉 Grain & Oilseed Market Recap
Soybean futures edged lower Tuesday, with the Mar26 contract slipping about a penny to settle near $10.62. This came despite China returning to the U.S. market with a soybean flash sale, as expectations for a record Brazilian crop continued to pressure prices. Corn futures moved lower on South American crop optimism, while wheat futures also finished lower amid hopes for progress in the Russia-Ukraine conflict and expectations for a record Argentine wheat harvest.

🌧️ South American Weather Update
Brazilian weather continues to support ideas of a large soybean crop. According to CropProphet data, Brazilian soybean areas received 106% of normal rainfall over the last 14 days (production-weighted). Forecasts remain favorable, with near-normal rainfall expected in both the 1–7 and 8–14 day periods, though amounts will vary.
Argentina is a different story, with very little rain expected over the next week. Euro model guidance suggests rainfall returns to normal in the 8–14 day window, with rains likely returning to corn and soybean areas around Tuesday next week. Some southern regions may wait longer.

🌾 Argentina Crop Update
Argentina’s wheat crop is now projected at a record 27.8mmt, up from 27.1mmt previously, thanks to favorable weather and strong yields. About 93% of the wheat crop has been harvested. The Buenos Aires Grains Exchange also reports soybean planting at 82% and corn planting at 84%. Hot and dry conditions ahead could still pose risks for corn and soybeans.

🚢 USDA Flash Sales
USDA reported soybean flash sales Tuesday:
• 136,000mt (5 mil bu) sold to China for 2025/26 delivery
• 231,000mt (8 mil bu) sold to unknown destinations for 2025/26 delivery

🏦 Federal Reserve & Interest Rates
The Federal Reserve is expected to keep interest rates steady near term. December meeting minutes show growing resistance to additional cuts as inflation pressures persist. Strong economic growth and consumer spending have reduced the urgency for easing, even as unemployment has ticked higher. The Fed’s dot plot now projects just one rate cut in all of 2026. Markets are pricing an 83% chance of no cut in January, with slightly higher odds for a cut in March.

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