Corn high yield in the hope of falling food prices

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corn high yield in the hope of falling food prices

2014-07-28 09:26 |
source: China Grain Network |

in the week ending July 25, 2014, the global food market prices mostly fell, because the weather in the US corn producing areas was almost ideal and the corn yield was in sight. At the same time, corn prices have fallen sharply recently, attracting overseas buyers to purchase, restricting the price decline.

On Friday, the September 2014 corn period on the Chicago Board of Trade (CBOT) closed at about 363 cents per bushel, down 8.25 cents from a week ago. December corn closed at about 371.75 cents a bushel, down 6.75 cents from a week ago. US Bay's No.2 yellow corn export price averaged 456.50 cents per bushel, down from 461.75 cents per bushel a week ago. November corn futures for the European EURONEXT closed at 155 euros a tonne, down 8 euros from a week earlier. The purchase and sale price of corn delivered in Argentina in August 2014 was 182.08/193.89 USD per ton, compared with 186.80/192.71 USD a week ago, FOB price on the river. The January 2015 corn futures on the Dalian Commodity Exchange closed at 2331 yuan per ton, up 8 yuan from a week ago.

Let's look at the U.S. corn crop. The U.S. Department of Agriculture's crop progress report shows that so far, the rate of good corn crops in the United States has remained at an all-time high. As of July 20, the proportion of corn with excellent ratings was 76%, the same as a week ago, and higher than 63% in the same period last year. This week Lanworth, an analyst owned by Reuters, predicted an average U.S. corn yield of 172.8 bushels per acre in 2014, up from 172.1 bushels a week ago and 165.3 bushels currently expected by the U.S. Department of Agriculture. Lanworth expects U.S. corn production to reach a record 14.6 billion bushels this year, and the U.S. Department of Agriculture expects U.S. corn production to be 13.86 billion bushels this year.

From the perspective of demand, the price of corn in the United States has fallen sharply recently, hitting a four-year low, attracting overseas buyers to purchase in the market. The U.S. Department of Agriculture's weekly export sales report showed that in the week ending July 17, U.S. net corn sales (including the old season and the new season) totaled 1.435 million tons, up 34% from 1.069 million tons last week. Among them, the sales volume of corn in the new season is as high as 1.1434 million tons, which is not only much higher than the 495000 tons last week, but also higher than the 40 to 600000 tons expected by analysts.

2013/14 2014/15 Total
week ending July 10 573,700 495,000 1,068,700
week Ending July 17 291,500 1,143,400 1,434,900

in addition, U.S. farmers hoarding goods for sale also helped corn prices rebound from their current lows. Agricultural prices have risen sharply in recent years, and American farmers have plenty of money on hand, so they are not eager to sell corn at current prices, but wait for prices to rebound. In addition, the improved storage capacity of U.S. farms, including the use of giant white plastic bags common in the agricultural areas of Argentina's Pambas Plain to store corn, is much less expensive than traditional barns and can be stored for up to two years, which also helps farmers increase their bargaining power when dealing with grain giants such as Cargill.

Other news included a July supply-and-demand report from Agriculture and Agri-Food Canada showing that Canadian corn and barley production may be lower than earlier thought due to adverse weather. According to the report, Canada's barley production forecast for 2014/15 was lowered to 7.34 million tons, lower than last month's forecast of 7.7 million tons, but still higher than the previous year's forecast of 10.237 million tons. Canada's corn production in 2014/15 is expected to be 11.305 million tons, down from 12.375 million tons predicted last month and 14.194 million tons last year.

In general, the main factor affecting corn prices in the near future is that the decline in corn prices has attracted improved demand, but the prospect of corn supply in the new season is still huge. It should be pointed out that although the demand for corn has improved, the large supply side of corn is currently the main factor affecting prices. Unless obvious weather problems in the United States and even the world cause corn yields and yields to be lower than earlier expected, it is difficult for improved demand for corn to support a sustained rebound in prices. After all, corn prices are only at low levels to stimulate cheap buyers to enter the market. Once prices go up, it is difficult for demand to remain strong. In particular, at present, the fund still holds a net long order of 70000 lots in the US corn futures market. Although it has decreased by nearly 45000 lots compared with a month ago, there is still room to continue to reduce its holdings, and it does not even rule out the possibility that the fund will overturn. At present, the fund has been in the soybean and wheat market to complete the more empty. Therefore, we are still not optimistic about the rebound in the corn market. Unless there is an unexpected change in the weather, any rebound will only provide the market with a new opportunity to sell.