Last month, China made the announcement it would use ethanol in its gasoline across the country by 2020 as a way to strengthen corn demand and decrease smog.
Andy Shissler of S&W Trading thinks there will be some “real substance” on the market in the next three years during China’s expansion period.
“Any time they have a short crop, they’ll be here for U.S. corn,” he said. “We get a lot of talk about the stocks that they’re sitting on over there—I would say at this point, probably only 30 percent of their stocks in that big pile is usable at this point.”
Shissler has heard reports that 70 percent of the Chinese corn stocks are “past its date” and can’t be used.
“They don’t have quality corn. They wouldn’t have an ethanol plant built to use it,” he said.
Chinese corn prices aren’t making the farmers happy, so Shissler said the government might have to make a subsidy payment in order for farmers to plant corn in 2018.
“Something’s got to give from their government, and that’s why they’re getting in the ethanol business,” said Shissler.
Hear Shissler’s full thoughts on AgDay above.