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SE Arkansas | The market has totally ignored the tight World Supply and Demand in Corn. Instead, it has focused on above trend production estimates in the US. Meanwhile prices continue to rise in China(Above $7.00) and the Chinese government is frantically auctioning reserves to keep the price down. Why is this happening? The immediate problem is a bad crop. How bad? Nobody really knows. The other problem is that structural demand in China has outgrown their ability to be self sufficient. Their reserves have been falling for several years now and are estimated by the USDA to be down to 2 Billion bushels by the end of the 18/19 marketing year. I have predicted many times on this site that China will start importing Corn in 2019. The evidence is starting to support this thesis. Look at what happened with Cotton last year. We had a good crop even after the hurricane damage. The price fell to 66 cents towards the end of harvest. It then turned higher and has not looked back. Then presto! In the July WASDE, the USDA adjusted down China's Cotton reserves by 6.3 Million Bales. So you really don't know what's over there. China tends to lie about reserves to keep import prices low. So, is the Corn market going to enter into a Bull Market towards the end of Harvest? I think so. | |
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Bull Market in Corn?
