Sluggish corn demand in the U.S. has been a concern for months. This past week, demand got a big boost, with USDA reporting daily flash sales from China. According to AgDay TV those sales tally up to 83.1 million bushels since March 9.
The consistent buys buoyed corn prices. Now the industry is asking two major questions:
- Why is China buying?
- How many more purchases are yet to come?
“A lot of experts still think there’s more to come, but that’s not really a big surprise in terms of why they’re buying,” says Tregg Cronin, a market analyst from Gettysburg, South Dakota. “They took advantage of a big price drop. We dropped 50 cents a bushel on corn in the last five days of February, and they stepped in and started buying then. They’ve continued to buy, as corn has kind of snuck lower.”
Cronin says China is notorious for swooping in and buying corn once prices drop. He thinks it’s not just price that’s making U.S. corn an attractive purchase for China, but it’s also the fact China needs to buy corn.
“When you look at China’s balance sheet, it was pretty apparent that they were going to have to buy corn from someone, it’s just that most people thought it was going to be from Brazil,” he says. “And China is a very opportunistic buyer. So, they’re stepping in and buying some U.S. corn, and I think that’s helped stem the tide the last several days. So, we’ll take it and hopefully there’s more to come.”
The daily corn buys from China have boosted prices, but corn export demand was so sluggish, DuWayne Bosse of Bolt Marketing questions whether China stepped in and buying corn soon enough.
“It might be just a little bit too late for the markets,” says Bosse. “When you think about it, the bears are always going to push on these USDA flash sales days to China and suggest you’re too far behind. It’s hard to catch up, and they’re not wrong in saying that it would take a lot of these sales to get caught up and have USDA stop lowering our export demand and actually start to increase it.”
