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Mizzou_Tiger
Senior Advisor

China........

http://www.agrimoney.com/news/corn-jumps-amid-warning-of-china-tipping-point--4269.html

 

food for thought.........especially if they are importing our meats too.........

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11 Replies
Hobbyfarmer
Honored Advisor

Re: China........

That article might lead someone to be a little more comfortable with grain still unpriced in the bin?

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Mizzou_Tiger
Senior Advisor

Re: China........

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Palouser
Senior Advisor

Re: China........

If you assume the figures for China corn production were less than stated by the amount indicated then one is looking at a 24 MMT shortfall. China has reserves and they have already tapped them to keep corn prices in hand domestically. China ALWAYS replenishes its inventories the first chance they get. They calculate what their breathing room is for delaying purchases to periods of calm or negative psychology but, THEY WILL BE MADE. If they don't get a break in the market and domestic production can't make it up (doubtful really) they will eventually buy at whatever price it takes. The reserves are for both Chinese protection and global market protection.

 

China tends to keep about 1/3 of global grain reserves domestically - which will not come onto the market. 

 

Without reserves China could potentially be in a position to buy 20 MMT on the global market in a year. Just imagine the market havoc that would cause, and it would cause a lot of fear and anxiety regarding China and their intentions, let alone what might happen next. 

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Mizzou_Tiger
Senior Advisor

Re: China........

IF IF IF IF............China steps in and starts buying huge amounts, panic buying if you will..........it tells you they are dangerously low knowing they can not hold out till NA fall harvest...............

 

I have echoed this for over a year now...........its a game of cat and mouse..........and when you are buying to fill bowls because the cellar is empty, there is a whole nother level of demand that has not even showed up yet..........and that demand is building back reserves...........

 

just in time inventory works..........right up until just in time becomes a day late and a dollar short............

 

China has been banking on a large NA and SA and domestic crop for two years..............its starting to catch up with them and probably other world nations..............

 

keep your buyers on speed dial...........and request COD.............

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sw363535
Honored Advisor

Re: China........

What country of 350+million would try to operate on a just in time supply of food.  Or even a 60 day reserve.  Smiley Happy  Smiley Happy

 

How foolish

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Mizzou_Tiger
Senior Advisor

Re: China........

i hope your joking.........because the world has been operating on just in time inventory with regards to grains for a long time.........

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ncil
Veteran Contributor

Re: China........

I really doubt that China will  panic buy, they are more sophicated than that. They will buy every bu. that Argentina has to sell, then any other country, then other grains like feed wheat, then make an official announcement that they have plenty, when the CBOT tanks, they will buy their corn from the US.

 

And yes the whole world , especially the US has been living on JIT for some time. If we had a 60-90 day supply, prices would tank until we got back to where we are today. Wild times ahead.

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Palouser
Senior Advisor

Just to be clear

I don't believe China is on the verge of panic buying. That's what their reserves are for. But they will replenish this year if reserves were drawn down significantly. While they buy for immediate consumption. Everything goes right they skate through. If not it could become more tense. I think they can string things along for several years if need be, assuming no really big drought hits. If the US has a poor corn crop they will have to be creative. They've proven they can be.

 

This is a very different scenario than 10 years ago. The world has permanently changed.

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sw363535
Honored Advisor

Re: China........

Yes joking MT------------But pointing out how much USDA has lost its way.  Why on earth would the US find itself in the food jeopardy position similar to the rest of the world.  

Following WW2 USDA worked to insure a grain supply, helping build storage and paying storage to control a safety net of grain supply.  Then abruptly changed in the 80's paying  LDP's to encourage dumping of cheap grain onto the market.  

Now we have a third world, hand to mouth, grain policy.  We depend on our large production capacity to keep us out of trouble, but in reality we are competing with the rest of the world for our own supply.

 

This is the reality that keeps me "complaining" about the USDA reporting process.  It is our only possible warning and I think we have the idea that we can just go out and buy what we don't have when the time comes.   We are one of the 4 largest populations on the planet where will we go to buy?/?  Walmart---------------------------seems a bit foolish to me.  And we comment on how we are glad China doesn't operate that way!!!!!

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