Low demand increases pressure on corn prices

The lack of active demand for corn from China increases pressure on prices, as traders expected increased purchases after lowering their harvest forecasts in Brazil.

Yesterday, on the Chicago SWOT, December corn futures fell 1.6% to.210.2 / ton, losing 3.7% from Monday due to low export rates and good condition of corn crops in the United States. The approach of Category 4 hurricane Aida to the Persian Gulf of the United States, where export ports are located, and possible problems with export shipments have not yet supported quotes.

According to the USDA, the number of corn crops in good or excellent condition remained unchanged for the week and remained at 60% (62% last year), although analysts expected their condition to worsen.

Asian buyers are in no hurry to raise corn prices and are willing to pay 3 310-315/ton CFR, but offer prices remain at 3 325-330/ton CFR.   

In recent tenders, American corn lost to South American and South African. South Korean company KFA purchased 66 thousand tons of corn from South America or South Africa for delivery in September – October at a price of 3 322/ton CFR.

The Taiwanese feed producers association MFIG purchased 65 thousand tons of Argentine corn for delivery in November at a price of 3 322/ton CFR.

The decision of the Chinese authorities to improve the management of state reserves and increase inventory in order to stabilize domestic prices has not yet affected prices, although usually any news about a possible increase in demand from China leads to a speculative jump in prices. Therefore, China's increase in corn stocks will be a new factor of pressure on prices.

In Ukraine, prices for new crop corn remain in ports at the level of 2 240-245/ton or UAH 7300-7400/ton, as they are supported by active forward sales, including to China.

During the week, the European Union increased corn imports to 490.3 thousand tons, and since the beginning of July it has purchased 2.4 million tons, which is 6% less than on this date last year. Brazil supplied 1.5 million tons of corn to the EU, and Ukraine – 616 thousand tons. the EU corn harvest will exceed last year, and an increase in feed wheat volumes will reduce demand for imported corn. Therefore, Ukraine with a record corn harvest will actively compete for the EU market with the countries of South America and the United States.