After a brief hiatus, it seems China is back buying U.S. corn again. The USDA confirmed four daily sales this week, for a total of 153 million bushels.
“The reaction to the purchases - in my opinion - actually came about before the purchases were officially announced,” says Joe Vaclavik of Standard Grain. “We started to hear chatter about these purchases late in the previous week. And then the purchases were reported Tuesday, Wednesday, Thursday. So, the market kind of priced that stuff ahead of the fact, as it often does.”
On Thursday, the market closed lower, but prices made a comeback Friday. Vaclavik says despite the trade’s reaction after the purchase were confirmed, the consecutive buys this week create an even better story for corn demand.
“Overall, it’s a big positive,” says Vaclavik. “This big book of sales is excellent news. The question now, of course, is can we get it all shipped? And that’s kind of going to be the next big thing.”
Matt Bennett of AgMarket.Net agrees with Vaclavik- the attention of the market now is not only can it all ship, but when will the USDA adjust its balance sheet to reflect the recent sales.
“I think that there’s a lot of questions on how much can be shipped,” says Bennett. “It was pretty interesting to see the shipments this week be so robust for corn. At the same time, the beans haven’t completely fallen off yet. So, it might be answering questions for a few people on what our port capacity is. I think that we’ll be able to ship a little bit more corn than maybe some people are giving us credit for.”
Bennett says based on this week’s export action in both sales and actual shipments, he thinks the USDA will need to adjust its balance sheet in the next World Agricultural Supply and Demand Estimates (WASDE) report.
“I look for the USDA to be forced in April to make a decision to finally go ahead and increase exports, I’m going to say 100-150 million bushels,” says Bennett.
Bennett says China can still buy U.S. corn cheaper than it can within China; a sign that the Chinese demand is real.
Related Stories:
Politics or Real Demand: What’s Driving China’s Buys this Week
