China's Corn Supply Less Than Reported

China's domestic supply of corn appears to be quite a bit less than estimated, as local and regional farmers, apparently in an attempt to boost their status with the Chinese government appear to have overestimated the corn harvest in the country.

Both the Chinese government and the USDA said the country had produced a record crop of 191.8 million tons in 2011, but that appears to be anywhere from 6.8 million tons to 24 million tons less than the actual corn production numbers.

Domestic Chinese corn has already started to jump in price in response to government agencies and private producers bidding for the grain in the tighter-than-expected market.

Originally the USDA estimated China's corn imports at about 4 million tons, assuming the accuracy of the 191.8 million ton figure. That could, and probably will change significantly as the situation unfolds. Some estimate that corn production in China for 2011 may be as low as 168 million tons.

China has officially come out and said they have enough corn reserves and won't need to import a lot of corn for 2012, but that could be a negotiating ploy to keep corn prices somewhat stable as demand ramps up.

Even so, and with the drought pressuring corn supply in Brazil and Argentina, China can easily enough shift to importing wheat as a secondary choice if corn prices rise too high, waiting for an opportune time when the price pulls back. It'll be an interesting year for corn imports and exports around the world, including the United States.

Corn and Midwest Storms and Hurricanes

Damage to corn and other crops have yet be assessed from the destructive hurricanes and storms which ravage much of the midwest and parts of the south.

States and surrounding regions most affected by the storms are Kentucky, Illinois and Indiana.

Of particular interest will be the extent of damage to any stored grains or crops, as well as on the building and storage units themselves.

It'll probably take some time before we know if there is enough damage to have a significant impact on crop prices or exports.

Corn Exports Up 5 Percent

Corn exports are up 5 percent from last week, according to the most recent U.S. Export report from the USDA. They are also up 2 percent from the four-week average.

Corn exports rose to 818,100 MT over last week. Leading importers of U.S. corn were Japan (341,900 MT), Mexico (279,500 MT), South Korea (89,800 MT), Cuba (26,100 MT), Venezuela (22,000 MT), and Colombia (20,700 MT).

Corn futures opened down 2 cents as the market takes a breather after the February run up in prices.

Corn Concerns Push Ethanol Higher

Rising demand for corn exports from the United States pushed up the price of ethanol futures for the second day in a row, as worries over production costs pressured ethanol higher.

Assumptions the distilleries will be forced to compete for supply with foreign buyers, drove corn to a three-week high Wednesday.

On the Chicago Board of Trade, denatured ethanol for February delivery climbed 0.2 cent to $2.169 a gallon.

Corn futures for March delivery rose 3 cents, or 0.5 percent, to $6.42 a bushel in Chicago.

In the ethanol cash market, prices rose in New York 1.5 cents, or 0.7 percent, to $2.285; on the West Coast it was up 2 cents, or 0.9 percent, to $2.295; in Chicago it increased 2.5 cents, or 1.2 percent, to $2.18; and in the U.S. Gulf it jumped 2 cents, or 0.9 percent, to $2.265.

Corn Exports Up 25 Percents Says USDA

A U.S. Export Sales report from the USDA siad that corn exports for the week were up 940,700 MT from last week.

Top export regions, according to the report, were Japan (214,000 MT), Mexico (193,300 MT), South Korea (126,700 MT), China (120,200 MT), Saudi Arabia (70,200 MT), and Taiwan (48,700 MT).

The announcement by the Federal Reserve that it was going to keep interest rates supressed through 2014, had a positive impact on corn futures, which were up on Wednesday's close, and were called up 8 to 9 cents on Thursday.

Record Corn Crop Won't Solve Supply Challenges

Corn supplies will stay tight in the U.S., the largest grower and exporter, even as greater planting spurs record production, the U.S. Department of Agriculture’s chief economist said. Soybean and cotton crops may also increase.

Farmers will harvest a record 13.73 billion bushels of corn this year, up from 12.447 billion last year, on 92 million planted acres, Joe Glauber, the economist, said today at a USDA forum near Washington. Greater demand for livestock feed and ethanol will limit gains in stockpiles next year, after dropping to the lowest level since 1996, he said. Prices are up 80 percent in the past year on the Chicago Board of Trade.

“Despite an increase in acres, the corn market is going to remain tight,” Glauber said. “It points to the fierce competition for acreage this spring.”

Tighter supplies helped boost global food costs by 25 percent last year, reaching the highest ever last month, according to the United Nations. Rising demand also is helping to boost net-farm income in the U.S. by 20 percent this year to a record $94.7 billion, the USDA said earlier this month. U.S. farm exports will jump 25 percent to a record $135.5 billion in fiscal 2011, Glauber said today.






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Are China's Corn Imports Short- or Long-Term?

For the first time in well over a decade, China has acquired large quantities of corn from U.S. farmers, importing close to 1.2 million metric tons.

Every time something like this happens, the media catches it and offer the possible narrative of a new age arriving for corn and other grain exports.

There will be only one way to find out, and that is time. China is close-mouthed about the circumstances surrounding the unusual actions they've taken, and part of that is for obvious competitive reasons, but also political ones.

Although China hasn't experienced near the extent of droughts Russia has in relationship to wheat, it has still had a number of them in the nation, which has apparently caused them to be short this year.

The other scenario is whether or not the Chinese population, which is growing wealthier, is increasing its demand for corn through its acquisition of meat.

One final element could be concern over the response of its people if they find out there is a shortage of corn. A couple of years ago riots broke out over higher food prices, and panics are easy to start if people begin to think they may not get food at all.

The official word from Beijing is the imports are based on higher domestic corn prices, adding the grain reserves in the country are enough for the people.

Dry Weather in Argentina Pushed Corn Prices Up Slightly

Dry weather in Argentina gave corn prices a boost today, after falling to their lowest level in a month yesterday. Argentina is only second behind the U.S. in exporting of corn.

Projections are the conditions in Argentina will continue, as expectations are that less than 1 inch of rain will fall in the major agricultural regions of Argentina over the next couple of weeks.

Corn responded by moving up as high as $3.695 a bushel on the Chicago Board of Trade in electronic trade, while closing at $3.66-1/2 a bushel.