Play Turner’s Take Ag Marketing Podcast Episode 267
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Big news out of the Ag Forum today. Large multiyear Chinese demand for US corn might be a reality. In other news new crop stocks will start off adequate for corn and tight for soybeans next marketing year, which should not be a surprise to traders. If you want to hear more about our thoughts on new crop and why China is likely to be a big player in US corn for foreseeable future, then take a listen to this week’s Turner’s Take Podcast!
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Ag Forum New Crop
Below is US Corn and Soybean balance sheets for 2021/22. Click here for the full presentation. At 92mm acres and a 179.5 yield corn starts off at 1.552 billion ending stocks. This is an adequate supply of corn but runs the risk getting tight if demand surges or the crop is sub par. There is no reason for new crop corn to go below $4 but it is hard to argue for $5 or higher without a real weather scare this spring/summer.
Soybeans is the second table below and with 90mm acres and a 50.8 bpa new crop ending stocks are only 145mm. That is tight and it could be a record starting point. Soybeans need acres and a good crop. This suggests soybeans should be elevated the next 12 to 18 months. Old crop should trade in a $12 to $15.50 range and new crop between $11 and $13.
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Chinese Corn Demand
For me this was the big news out of the Ag Forum today. Click here for the full presentation. The USDA thinks there is a possibility that Chinese demand for US corn could stay strong for years. To combat a return of ASF, hog producers in China will need to feed more corn. It is believed that before the ASF crisis only 50% of hog feed was corn. A significant portion of hog feed was recycled food waste and that could have contributed to the spread of ASF in China. Food waste will be removed from feed and replaced by corn. The USDA think corn could make up 75% of feed post ASF.
Corn feed demand pre ASF was 100mm MT. When the Chinese swine inventory full recovers the USDA thinks the demand could increase to 142.5mm MT. China can’t grown all of that corn and a lot of it will have to come from imports. The US could be the biggest beneficiary of China using more corn for hog feed.
These are just estimates by the USDA. On the first page of the presentation they state no one knows how much corn China will buy and for how long it will last. However, the USDA does think this is a “systemic” change to their feed program and not a one-off year of strong demand.
Interested in working with Craig Turner for hedging and marketing? If so then click here to open an account. If you are a speculative or online trader then please click here.
Turner’s Take Podcast
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