Grain Spreads: Corn Demand

Sean LuskGeneral Commentary

Commentary

Demand for Corn is picking up slowly. Corn shipments to China increased over the past four weeks, highlighted by a marketing year high of 33.7 million bushels inspected for export this AM, with almost 11 million bushels going to China. Shipments from Ukraine are slowing, as Russia continues to slow walk inspections limiting grain exports. South American supplies are tightening seasonally in my view.  Marketing year to date corn export shipments still fall short of the seasonal pace needed to hit USDA’s target by 176 million bushels. Seasonally, weekly shipments need to double over the next several months, but they have to do even more than that to make up for the deficit created by this year’s slow start. Any pickup in export demand would likely need to be triggered by South American crop concerns in my opinion. While both Argentina and southern Brazil are struggling with drought, Brazil’s secondary safrinha crop could determine the level of concern in South America. But that crop won’t be planted until their massive soybean crop is harvested. That is weeks away although some areas in Mato Grosso have started harvesting beans. Based on the charts, it looks as if Corn can challenge near the 7.00 level again, pre-USDA report. Volume is light amid holiday trading. Should this uptick in demand pick up and weather deteriorate in Argentina, (World’s 3rd largest producer), we could see the market continue to chop higher. 

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