Confirmation that China was behind one of the biggest-ever purchases of US corn will underpin prices of the grain, even if the US harvest recovers from sowing delays to achieve bumper yields, Commerzbank said.
Acknowledgement by Sinograin, which manages China's central government grain reserves, that it bought 1.0m tonnes of American corn in March, has underlined the country's status as a buyer of the grain – at the right price.
"China has thus confirmed its reputation as an opportunistic market player, buying when prices fall and selling when prices rise," the bank said.
Expectations that Sinograin, which has denied further purchases for now, may buy more the grain if the market tumbles again "should thus stand in the way of a major slump in corn prices, even if the harvest does exceed forecasts".
"More corn purchases are possible in the coming months if prices retreat."
'A slow go'
The comments come amid a dip in grain markets, attributed largely to an easing in the wet weather which has delayed US corn sowings, and southern dryness which has damaged prospects for winter wheat.
In Chicago, corn futures for July delivery lost 1.4% to $7.19 ½ a bushel on Thursday, as of 11:10 GMT, returning to among their lowest levels since late March.
However, the prospect of further planting hold-ups, with more rains forecast for the northern Midwest, remains an "overriding concern", Commerzbank said.
At broker Market 1, Mike Mawdsley hightlighted an eight-to-14 day forecast which "has Montana, South and North Dakota, Minnesota, Iowa, Wisconsin, Michigan, Illinois, Indiana, and Ohio all with below normal temperatures and above normal precipitation.
"Yes, there will be planting done, but it would certainly appear to be a slow go, as well as slow emergence with the cool temperatures ."
High-profile deal Sinograin's admission comes two months after the US Department of Agriculture revealed a 1.25m- tonne sale of US corn to an "unknown" destination, believed at the time to be China, as crop prices tumbled following the Japanese earthquake.
The deal - America's sixth-biggest ever corn sale - regained prominence this week as traders reported that the first delivery of the order was being loaded in the US Pacific North West. Further details may be revealed in weekly US export data due later on Thursday.
There is talk that corn reserves in China, the second-ranked producer and consumer of the grain, have fallen to some 10m tonnes, a figure which would come in well below official estimates, at the lowest for some 40 years.
Many observers have questioned the accuracy of China's harvest estimates, notably a 164m-tonne figure for the harvest two years ago, despite weather setbacks which some analysts believe cut production below 140m tonnes.
No comments:
Post a Comment