Is China the Only Answer to Save Corn Prices This Year?
China made a monster buy this week of corn. USDA confirmed the 1.9 million metric tons sale was the third largest on record, and the biggest U.S. corn buy ever by China.
Even with the new demand, the corn market still seemed unphased. Analysts say much of that was because traders were focused on the weather Thursday. Drought-stricken areas of the Corn Belt saw some rain, helping revive some of the crop needing rain. That positive weather added more pressure to already low corn prices.
What will it take to boost corn prices moving forward? Some analysts think it’s going to take more demand from China. Darin Newsom of Darin Newsom Analysis saw China may be part of the equation, but not all of it.
“Thinking that our great trade war enemy is going to be the one to step in and save the corn market, the ethanol market, soybean market, soybean meal, pork, cattle, whatever else, seems a bit foolhardy,” he says. “Does the US need China? Absolutely. Are they going to step in and save all of our markets? Absolutely not.”
Newsom says the biggest advantage the corn market has right now is not only low prices attracting buyers, but also a weaker U.S. dollar
“If we just look at this from a business point of view, and put all the politics aside, U.S. crops and U.S. supplies are going to have a good value on the world stage going into 2020-21,” says Newsom. “The question is, ‘Will it be enough to offset the political side? And what happens in November?’ So, do we need China? Sure. Is it going to happen? I think the jury’s still out.”
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