Old-crop Corn Gets a Boost from Chinese Demand

April 27, 2012 09:09 PM
Old-crop Corn Gets a Boost from Chinese Demand


China wants your corn and soybeans, and the country’s demand is having a nice effect on prices.

This week the Foreign Ag Service reported sales of 120,000 metric tons of corn and 110,000 metric tons of soybeans for delivery to China.
Jerry Gulke, president of the Gulke Group, says in China, their corn and soybeans have been high priced, which may be one reason they are gobbling up U.S. grain.
Their recent surge of purchases has him asking:
  • Do they have problems with their crop?
  • Did they overestimate their crop and underestimate demand?
"Either way, they certainly weren’t shy about buying old-crop corn," he says. At Friday’s close, old-crop corn was up nearly 30 cents, and July 2012 corn closed at $6.25.
May 2012 soybeans closed at $14.96, up 15 cents.
If you have old-crop corn, you’re getting another great pricing opportunity, he says.

A Big Hit to the Livestock Market

This week an outbreak of BSE was announced by USDA. Immediately following the news, cattle prices dropped, but have since rebounded.
Gulke says he doesn’t think the BSE scare will have a long-term effect.
Prior to outbreak, Gulke says livestock supply and demand were not in a good place. "There’s still a demand problem for cattle from consumers." Additionally, he says there seem to be more hogs coming to market than anticipated, without a significant increase in buyers.
"This is not a good situation for the livestock market at all. They were under water already and Friday’s increase in old-crop corn put them further underwater."
Gulke hopes this double whammy for cattle producers doesn’t continue for the rest of the year. "We don’t want any more liquidation because we need them back with the corn is cheaper, theoretically this fall."  
Listen to Gulke's full audio analysis:

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