Market Commentary for 3/14/24
Some market participants were disappointed to see no changes to corn demand in the March supply and demand report last Tuesday.I suspect the USDA is waiting until the March 31st stocks report to see what remaining supply is left in the US to make any changes to demand estimates.
USDA Updates Sorghum Demand
The USDA did acknowledge a big issue with sorghum this month. Exports decreased 70-million bushels and feed demand increased 50-million bushels. This should be something to keep an eye on as sorghum is a direct feed competitor to corn.
While many market participants think the corn export estimate should be increased, this 50-million-bushels of sorghum added to feed may offset some corn for feed if corn exports are increased. Add to that, the increasing wheat carryout and the 35-million-bushels of wheat that have already been added to feed year over year, and potentially any corn export increase will be offset by feed decreases.
US Exports Uncertainty
There is also growing concerns of a potential executive order that will impose a $1 million dollar docking fee at all American ports for any Chinese built or flagged shipping vessels.20% of the world’s commercial shipping fleet and 50% of the ships built in the last 25 years fall into this category.Should this docking fee be imposed it could make it more expensive to export US grain abroad compared to South American or Black Sea grain.
While other countries’ ships could still presumably load in the US, it would still likely increase shipping costs because the demand for those other vessels would be higher.There still seems to be more questions than answers on this issue currently.
Plus, this week the European Union put new tariffs on US soybean and corn products in retaliation of the Trump administration’s tariff increase on certain products from the EU.
The uncertainty of the trade policies surrounding tariffs and reciprocal responses from other countries have the market on edge. Over the past several weeks hedge funds have exited about 50% of their length in corn. The longer these trade wars and uncertainty continue the less likely prices will rise significantly in the short term.
On a positive note, the price of US corn is still competitive globally, which should help keep demand strong and put a floor under current values.
Want to read more by Jon Scheve?
Are The Highs For Corn Already In For The Year?
Will Corn Rally Again?Can Corn Go Even Higher?
Could Wheat And The Retreating Corn Basis Be A “Canary In The Grain Bin?”
