Feb 01, 2021

Ag Markets Mixed As Corn Makes New High

Outlook for tighter ending stocks will likely support higher prices into start of growing season

Record Corn Buying From China

  • According to USDA daily reports, China bought nearly 6 million tonnes of corn from the US last week for its biggest weekly purchase on record.
  • There are reports China is still in the market to buy another 2 million tonnes in the near term.
  • If realized, imports would exceed the 7.5 million tonne quota set by the World Trade Organization for a second year in a row.
  • Private forecasts see China importing 25-27 million tonnes of corn from all countries compared to 7.6 million tonnes in 2019/20.
  • The total could include 18 to 20 million tonnes from the US with most of the rest coming from Ukraine.
  • This would make China the world's biggest corn buyer.

FBN’s Take On What It Means: China’s record purchases come amid its need to feed a hog herd that’s recovering faster than most expected. Plus, storms and drought damage during the 2020 growing season tightened domestic supplies. US total export commitments are already approximately 2,200 million bushels and suggest USDA’s current forecast of 2,550 million bushels for the marketing year will need to be adjusted higher. The outlook for tighter ending stocks will likely support higher prices into the start of the growing season.


Russia Considering Formula-Based Export Tax for New Crop

  • The exporter now is contemplating whether to impose an export tax on new-crop supplies as the country continues to deal with rising food prices.
  • Already an export tax at 25 euros per tonne starts February 15 then on March 1, it raises to 50 euros per tonne.
  • Now, the government may start a tax on June 1 that is formula based.
  • The current rumors are that the formula would be (price of wheat-$200)*70% though the $200 level still is being discussed.
  • Current FOB prices for Russia’s 12.5% protein wheat are around $296 per tonne, so in essence the tax would be around $30.
  • Several years ago, Russia had a formula-based export tax in place but still had impressive exports.
  • In September 2016, the government removed the export tax and the following years were much larger crop and export totals.

FBN’s Take On What It Means: The exporter already has the 2021 winter wheat crop in the ground, so the proposed export tax will have no impact on its production (excluding spring wheat). There is risk that producers who grow spring wheat may lean towards acreage of other crops to avoid an export tax, especially given that prices of several commodities are strong. Nothing official is yet in place for new-crop exports but any tax on wheat exports for the world’s largest exporter is a plus for other origins.

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Kevin McNew

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Marketwatch: Jan, 18

US Corn Price Idx: ZCPAUS.CM

open: 5.7667
high: 5.8486
low: 5.7266
close: 5.8288

US Soybean Price Idx: ZSPAUS.CM

open: 13.366
high: 13.376
low: 13.2328
close: 13.2696

US Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 7.3061
high: 7.3384
low: 7.2334
close: 7.2454

US Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.0114
high: 7.0566
low: 6.9566
close: 7.0014