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Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Corn exports surge to an impressive 1.8370 million metric tons for the week, more than doubling most trade estimates. Right now, US prices are simply hard to compete with. Even Ukraine is at a premium to US Gulf corn prices, some suggesting by as much as $10. Unfortunately, if prices manage to creep up too much higher, export volumes may not follow. Keep in mind we are also seeing a nice surge in ethanol exports. Reports were circulating yesterday that China purchased some 84,000 barrels of US ethanol during the month of November. One of their biggest purchases since 2010. Obviously the US discount is the driving force behind renewed corn demand. Below however is a pic showing the explosive growth in overall corn demand. Yes production is higher, but demand is doing a great job trying to keep up. In fact global corn consumption is expected to rise by an unusually strong 7% y/y, on demand from feed and industrial. However, as you can see from the graphic below, as long as the little blue-line (production), stays considerably above the little purple-line (consumption), rallies will remain limited. While US corn remains the cheapest in the world, I believe demand will stay strong (both exports and ethanol moving higher), but I am afraid supplies are just too burdensome at the moment to get any big money players real excited about being bullish. Moral of the story, we may see a few fleeting glimpses of grandeur here and there, but I am afraid we still haven't seen the bottom of the barrel in regard to price! Click Here for my daily email.
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