Europe underpins corn market
The news of agreements in Europe regarding the debt situation was nothing but positive for the markets today. Sharp rallies, following yesterday’s sharp declines, were the rule.
All is not well with the corn, wheat and soybean markets. There are other countries around the world with exportable supplies competing with the US for market share. This issue, combined with relatively high prices, means US exports have been off to a slow start this marketing year.
Slow, in some cases, is an understatement. This is especially the case for US soybeans. Sales commitments are way behind last year--some 330 million bushels behind. Shipments are not as bad, but the marketing year is young. What is happening? Brazil and Argentina have garnered much more business, primarily from China. For several months in the summer and early fall, due to currency values, these countries were significantly cheaper. Now there is not that much Chinese business left to do--just some sales in the January-March timeframe, before South American harvest starts.
For corn, the situation does not look quite as bad. Sales commitments are actually quite strong, but shipments still lag. The sales to China are helpful for corn sales totals. Plus, the crop size is small enough that exports need to be smaller, allowing competitors such as Argentina and the Ukraine to fill the gaps this year.
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