Grains - Grain Products

Corn: China finally buys corn in the USA

May 11, 2020 3:28 PM, Der AUDITOR
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PARIS. The corn market was slightly firmer in the USA, but remained virtually unchanged in Western Europe and the Black Sea. New corn purchases by China stimulated the market. The WASDE report is likely to show higher US corn inventories. US President Donald Trump announced that the US would buy dairy, meat and other products worth USD 3 billion to support US farmers. Rain improves corn growth conditions in Western Europe.

In Chicago, corn was trading at just under USD 3.22 per bushel at noon, 1.2% higher than yesterday. In Paris, the front-end date rose weakly to EUR 165.75 per metric tonne. In the USA, the market was supported by expected frost in the northern Midwest. In the USA, the purchase of 686,000 metric tonnes of corn to China also provided positive signals. Last week negotiations took place between representatives of the USA and China on the implementation of the phase 1 agreement, in which it was decided that the USA would temporarily withdraw customs duties on 146 Chinese goods until 7 August 2020, while China would strictly fulfil its import obligations, according to brokers. Tomorrow's WASDE report also had an impact on the market. In the USA, corn stocks will rise due to the slump in ethanol sales and also due to declining feed consumption. The Bloomberg survey of retailers showed that US corn end-stocks for 2020/21 were forecast at 3.41 billion bushels, which at 2,278 billion bushels for 2019/20 could exceed the April forecast of 2,092 billion bushels by 8.8%. In the USA, 70 ethanol plants have been closed since the corona crisis, which means 1 million metric tonnes less corn processing per week. US President Donald Trump announced that the US would buy dairy, meat and other products worth USD 3 billion from farmers to offset losses due to reduced sales. Retailers expected US corn production to be 70-72% complete, compared to 56% on a five-year average. The corn crops of Brazil and Argentina could be somewhat reduced due to weather conditions.

Corn spot rates (front date)

Corn, daily price development

Parity

EUR/mt

Diff. EUR/mt

Bordeaux, FOB

156.00

1.00

Netherlands, CIF

180.00

0.00

Oldenburg, DDP

190.00

0.00

Brake, FOT

182.00

0.00

Lower Rhine Region, DDP

182.00

0.00

Upper Rhine Region, FOB

182.00

0.00

Trade sources

Weather market continues
The crude oil market continued to stabilise. According to SIA Energy, China's crude oil stocks are said to have fallen by 9.5 million barrels after the lockdown lifts in April. This would correspond to a renewed increase in daily consumption of a good 300,000 barrels. According to the trade, the new OPEC cuts have been in force since May, but they will not yet lead to an equilibrium. Analysts from Rystad Energy reckon that the situation with very low crude oil prices will only slowly ease from the middle of the year. In Western Europe, the recent precipitation should accelerate the growth of young corn plants. In some areas, late frosts could lead to damage in the bunch. French corn remained very competitive compared with feed wheat. The increase in the import tax on third-country corn from EUR 5.27 to EUR 10.40 per metric tonne in Brussels stabilized the market.

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