We have bulls in the marketplace who point out how aggressively China has been buying corn, almost all for immediate delivery, and start making computations based upon the speed of purchases so far about just how much China could buy year to year over the coming few crop years. The numbers get quite large, and one can hardly be anything but bullish when you hear the 500 mb+ demand factors per year out there for the China market.
There are market bears who point out the early planting of corn and excellent conditions of the wheat crops (both HRS and winter wheat), and therefore plug in some big yield and acreage numbers for these two crops and come up with some large carryout figures for both.
Perhaps there is a little truth in both these points of view, as the bearish side of the market is the large potential crop size of the US crop, while the bull side is the large potential purchases and importance of the emergence of the Chinese as US corn importers. After all, the only real corn exporter in the world is the US, and we seem to have an interest in exporting corn to the Chinese (as we certainly import enough Chinese items to the US via Walmart!).
What really matters is the sheer bushels in each category, and what ultimately will we end up with on the crop size for US corn (163 bu as USDA now asserts, or larger or will some weather come along this summer that will trim the crop size somewhat?). And how much corn will China ultimately purchase. Currently USDA projects some Chinese corn purchases as they upped exports in the last report. They also have built into the 1.8 billion bushel carryout a yield about 3 bu above trend. So already, USDA is starting to play these numbers out as they are trying to guess what the ultimate numbers will be in both categories.
Wheat needs a 'China' buyer as well, with nearly 1 billion bushel carryout projected in US wheat to end the coming year, a very large number that is in desperate need of a 'China' surprise buyer to boost the exports of that market. Technically, wheat prices are struggling more with the large carryout figures, and threatening to push to new lows again on the recent round of selling.
Soybeans also are under some pressure, with soybeans testing recent lows as well. The corn is holding up somewhat better, but with the other two grains threatening new lows it might be just a struggle for corn as well to hold recent strength. But at least in corn there is optimism that China can bail us out of large carryout stocks, even if we have a large crop size in the end for corn.
Corn is definitely the crop with the earliest planting, in fact, this year is the earliest planting on record. And the history of early planting with adequate moisture levels in soils is strong for a above average crop size.
Be best way to describe the market, in the end, is market confusion. Even the stock market seems confused by what is playing out, as first it appeared the stock market collapsed without reason, with people blaming computers or a 'fat finger' for pressuring stocks to a nearly 1000 point loss in one day a few weeks back. Turns out stocks over the next few weeks tumbled right back down to those levels below 10,000 Dow, and here we sit for now. But stocks might be finding a bottom at that level, and hope springs eternal for another rally in the stock market.