Commentary: The Chinese have purchased approx 1 mmt of corn. There are thoughts that they could purchase another 1.5 mmt in the near term. This is a positive to be certain. It looks as though the near term low basis may of 332 could be the temporary low. There are a few near term supportive factors. However, it can’t be forgotten that the world at present is not short physical availability of corn. In addition, the ethanol margins remain a deficit which is prompting a slowdown of the process rate. This at present is manageable if the US gets back to work. Given the concern over corona, when this will transpire remains a moving target. The bailout package for AG is large, how it breaks down will need to be understood. It certainly won’t do anything to curtail plantings. Now the question is what the acreage breakdown will be. If the corn can gain the near term Chinese demand, and 1-2 million acres switch or are not planted due to some weather issue, then the corn has a chance to build from here and move a bit higher. As always exercise caution and quantify your risk.
John J. Walsh
President, Walsh Trading, Inc.
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