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| My ears were burning so I checked the site...though usually you have to say my name 3 times before I appear ; ) Dalian corn is deliverable...you can see the quality specs here... http://www.dce.com.cn/portal/cate?cid=1114586452100
The reason that Sept is inverted to Jan is that the Chinese government reserve auctions to date have not been for feed quality/deliverable corn. They've been corn only suited for industrial use after blending from the 2011/2012/2013 crop years. The feeders in China are all waiting for the "better" quality 2014 crop year and forward years to be auctioned. No word on when that will happen though it appears the reserve auctions will go into hiatus in late Sept/Oct so as not to pressure their domestic prices ahead of harvest. They will likely restart the reserve sales sometime during the winter though nothing is set in stone. So far it seems that the reserve wants to auction their oldest supplies first which makes sense.
FWIW...last week JCI (private Chinese grain analysts similar to ARC or Informa in the US) pegged Chinese reserve corn stocks at a whopping ~243mmts... or nearly 10bil.bu. How much of this is feed quality/deliverable is being hotly debated in the Chinese corn trade. We do know that China is in destocking mode and many believe Chinese corn will find it's way into the export market over the next year or three.
The big question is what will the Chinese farmer do with his corn crop this year? No one knows as it's a new paradigm. I will mention that the reserve had to buy ~110mmts (4.3bil.bu.) of corn last year under their expired price support mechanism. How low can domestic Chinese corn prices drop this crop year without increased government support is unknown...but the downside for next year is considerable.
It's not all doom and gloom....there's a lot of demand around at these prices (domestic and otherwise)....and it will only increase on further weakness...after all...there's no cure for low prices like low prices.... | |
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Dalian Corn
