China's Appetite for Grains Keeps Soybean, Wheat Demand Afloat

Different parts of the world have been dealing with harsh weather challenges presented by El Niño this year. Nonetheless, soybean sales were still able to reach a yearly high while wheat stays afloat thanks to demand from China.

“U.S. soybean export sales surged to a marketing year high during the week ending November 9,” as reported by Brownfield Agriculture News. “The USDA says soybean sales were nearly 4 million tons, led by strong demand from China as Beijing tries to shore up supplies in the face of planting delays and probable replanting in parts of Brazil.”

As mentioned, credit for a majority of the sales goes to China. The country has also been dealing with heat waves this year. As such, the second largest economy has been stockpiling soybeans in anticipation that the harsh weather could continue for the foreseeable future.

“China is gobbling up staple crops from around the world,” Bloomberg reported. “Just this week (Nov. 6 through Nov. 11), national stockpiler Sinograin booked more than 1 million tons of US soybeans for delivery between December and March, people familiar with the matter said.”

If supply forces remain tempered due to harsh weather, and demand stays elevated, that could be a boon for rising soybean prices. In turn, that should boost the Teucrium Soybean Fund (SOYB). The fund provides similar exposure to what investors could obtain by trading in soybean futures contracts. This offers short-term traders or longer-term buy-and-hold investors who want to diversify their current portfolios ingress to soybean price exposure.

China Demand for Wheat Also High

Soybeans aren’t the only commodity that China has been voraciously consuming. The country has also been purchasing record amounts of wheat, which has imports hitting record levels this year.

“The country has also been scooping up wheat in huge amounts, with imports heading for a record,” Bloomberg added. “Following a splurge on Australian wheat earlier in the year, large volumes were purchased last month from other main exporters including the US, Canada and France.”

Investors looking to get exposure to wheat prices can consider the Teucrium Wheat Fund (WEAT). The fund offers an easy way for investors to gain exposure to the price of wheat futures. For short-term traders, WEAT offers the ability to get exposure to wheat futures without having a margin account. For long-term buy-and-hold investors, the grain can also serve as an inflation hedge as consumer prices rise.

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