The return of China to buying large volumes of US corn has come just as domestic processors in the country are having to raise their bids in order to secure enough supply to keep operating, trade sources told Agricensus Tuesday.
A USDA private exporters note confirmed today that China has bought another 1.1 million mt of corn from the 2020/21 marketing year, taking its purchases of US corn to 19.9 million mt this year alone, but the move comes as domestic processors are struggling to secure supply.
“Processors are bidding for cash corn in the US, which means their prices are going to go higher,” one US-based source told Agricensus, with the heavy export programme now a key element in driving domestic prices higher.
The volumes bound for China come amid big expectations for this year’s US export outlook, with the USDA predicting 66 million mt to be exported over the marketing year – a figure that would comfortably smash the existing export record of around 61 million mt.
The latest purchase from China takes total US net sales to 60.6 million mt already, with just under half the year still to run and big outstanding programmes still in the books for Mexico and Japan.
“It’s a big struggle getting corn in the interior for end users,” a second US source said.
“Much of it is heading to ports. There should be enough to go round but we need to see the producers sell a little more,” the second source said.
“Certainly, the export programme is in full swing, so you do have that pull. But I would say processors are trying to ramp up their efforts before farmers head to the field for planting,” the third source said.
Earlier this week, USDA export inspections data revealed that the country’s hubs had inspected 2.2 million mt of corn in the week to March 11, with 1.4 million mt handled through the US Gulf, and over 600,000 mt dispatched from the Pacific Northwest.
For both hubs, the volumes handled are multi-year highs, and potentially amongst the busiest weeks of corn exports on record.
Some analysts expect the US could actually export up to 70 million mt of corn this marketing year – nearly 10 million mt more than the current record, but to get close to that figure, the US is going to have to maintain a multi-million tonne weekly export figure.
And that will pressure domestic corn users, whether in the feed industry or in ethanol – with up to 40% of the entire corn crop typically heading into production of the road fuel and farmers about to return to the business of planting.
“Certainly, the export programme is in full swing, so you do have that pull. But I would say processors are trying to ramp up their efforts before farmers head to the field for planting,” a third source said.
Ethanol producers will have limited capacity to switch, but feed processors in the US Plains are said to be looking at switching to high protein wheat should corn price itself out of the mix.
