Thoughts On China
A week ago, Luis Vieira, a freelance writer for Agriculture.com, checked in from China. He made notes about China releasing corn reserves in the future. I asked a floor trader source, his response to what Luis found out from the Asian powerhouse. Here's the trader's response, in his own words. What's your perspective?
"Yes, the Chinese sit on a years supply of corn.. 100+ million tons for food security and ag policy that controls corn imports and lets beans come in "freely". GMO corn is the concern, but GMO beans are ok. It's a farce to hold up rural incomes. Corn has consistently traded $10.00 a bushel. So, they have been flat on bean acres for 10 years and have expanded production of feed grain(corn). DDG and Sorghum imports have been a reaction to the program and high prices. And the gov't has been finding "legal" ways within the confines of WTO to curb the import of these competing grains..
The change in Chinese policy is to curb gov't reserves by disallowing imports and forcing domestic trade to participate in more aggressive gov't reserve auction.. the effect of more government reserve corn being offered is lower domestic prices now around $8.60... This is not cheap enough to compete with us for other origin exports... they did this in the early 2000's when they destocked leading up to WTO.. and they were a net exporter for a few years.. taking our South Korean business.. so its interesting but not a bearish factor for world markets per se.. it may top sorghums price premium to corn.. and could back up DDG prices a bit..
Corns concern for the moment is the too dry in NW Iowa.. Red river valley.. and too wet in eastern Corn Belt, losing acreage harvested and planted and yield potential, due to less nitorgen up take in the east. A sub-161 national corn yield could get you to 5 dollars. I think the market is fair here, using a 163-`164 national yield estimate."
Re: Thoughts On China
Re: Great post, elcheapo.
i figure India, ALSO is comin on Strong.
jeez, we're only talkin 3 billion folks ( both countries total ).
likely 300 million more folks added to the "middle class" income rate annually in the Pacific Basin ( maybe MORE 2 ).