Current Marketing Thoughts
Kevin Van Trump
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
More Inside Info Chinese Corn & Bean Demand
Apr 14, 2011
I was relayed some fantastic information from a trusted source inside China regarding what is currently happening with Chinese corn and soybeans. In a nutshell, it was their opinion that the Chinese farmers are not really the ones holding much of last years corn crop, but rather the small local merchants that were buying like mad during harvest and have been sitting on the inventory expecting higher prices. The problem now is that a portion of those stocks will need to start finding their way into the marketplace as temperatures are raising very quickly and a portion of this corn was stored with high moisture levels. Normally this wouldn't be an issue, and the stock would be scooped up very quickly but feed demand has been a little slow mainly due to delay of replacement of animals. Insiders believe the main reasons for this delay is the high cost of piglets combined with lower then normal temperatures in the main producing areas for this time of the year, exposing the animals to diseases, basically forced the breeders to be more cautious on when to start replacing of the animals and more conservative in order to avoid risk of loosing animals. With this issue tapering off they believe demand should start to pick up, but it may take a while. There are thoughts that heavy demand could ramp back up by June or July, but not any sooner. If this is true you have to believe we will not see China come back to the table for US corn anytime soon. My bet is not until they have a better assessment of their crop and what they will produce or how the crop in the US is progressing. Nothing really different, or that we didn't already know from soybeans. Essentially they are overburdened with soybeans stocks right now, the crusher margins are some of the worst ever, they have huge shipments on the way to the ports, and the Chinese government is restricting price increases for soybean oil. Throw in the fact that they are going to flood the market with another 3 million tons of there own soybeans and you can start envisioning the situation. To top it off, the Chinese government has agreed to sell this surplus of beans well below current market price. Delay in animal replacements have also hurt soy meal demand, locals however expect meal demand to slowly improve from about here on, hopefully by June or July we will once again see the Chinese demand we had seen prior to this. This is the exact reason I have been telling you to get your butt out there and get some things priced. Sure higher prices could be in the cards if production becomes a concern, but it is of my opinion this is a "demand" driven bull-market, right now demand is being manipulated and curtailed.
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