Corn continues to march to new highs, now trading around $4.80 per bushel. Much of what we’re seeing is demand driven. I was looking at corn sales for the marketing year ending September 1st and it validated much of what we’ve been discussing.
From the USDA website. China has imported 236,000 metric tons this marketing year. Over the last three years, their U.S. corn imports total 0. Yes, that is a 0. While this is only 1.5% of our total exports, it must come as a surprise demand factor due their absence of imports in the past. Also of note, Taiwan imported 651,000 metric tons. This is up from 488,000 last year and 0 in the previous two years. Yet another upside surprise. Combine this with Japan’s 66% increase over last year and you have three Asian countries’ demand increasing from 166,000 tons in 2008 to 5,216,000 tons in 2010. This accounts for 1/3 of all exports and obviously represents a HUGE piece of the pricing mechanism. Weekly net exports are as high as they’ve been in the last 10 years.
Fundamental Analytics Weekly Net Sales chart is the 2nd, "Interesting Formation ."Full access to currenc and historical grain reports is available at USDAGrainReports.com
I apologize for the poor formatting. While I may be technically competent, I'm not always technically capable. CORN - UNMILLED MARKETING YEAR 09/01 - 08/31 OUTSTANDING EXPORT SALES AND EXPORTS BY COUNTRY, REGION AND MARKETING YEAR1000 METRIC TONS AS OF SEPTEMBER 2, 2010-------------------------------------------------------------------------------- : CURRENT MARKETING YEAR :NEXT MARKETING YEAR --------------------------------------------------------- :OUTSTANDING SALES:ACCUMULATED EXPORTS: OUTSTANDING SALES --------------------------------------------------------- DESTINATION :THIS WEEK: YR AGO:THIS WEEK: YR AGO :SECOND YR: THIRD YR-------------------------------------------------------------------------------- :EUROPEAN UNION - 27 : 1.0 0.3 0.0 0.0 0.0 0.0 SPAIN : 1.0 0.1 0.0 0.0 0.0 0.0 U KING : * 0.2 0.0 0.0 0.0 0.0 :JAPAN : 4329.5 2595.1 166.6 88.9 0.0 0.0 :TAIWAN : 651.4 487.9 0.0 4.3 0.0 0.0 :CHINA : 236.0 0.0 * 0.0 0.0 0.0 :OTHER ASIA AND OCEANIA: 1214.5 1696.4 57.3 117.9 0.0 0.0 HG KONG : 1.3 1.5 0.0 0.0 0.0 0.0 INDNSIA : 0.0 1.4 0.0 0.0 0.0 0.0 ISRAEL : 226.0 0.0 0.0 0.0 0.0 0.0 KOR REP : 832.1 1633.3 57.3 57.8 0.0 0.0 MALAYSA : 3.3 3.0 0.0 0.2 0.0 0.0 OPAC IS : 0.0 1.6 0.0 0.0 0.0 0.0 PHIL : 0.5 0.0 0.0 0.0 0.0 &
nbsp; 0.0 SYRIA : 151.0 50.0 0.0 60.0 0.0 0.0 VIETNAM : 0.3 5.6 0.0 0.0 0.0 0.0 :AFRICA : 1144.5 557.7 0.0 174.6 0.0 0.0 ALGERIA : 0.0 0.0 0.0 26.5 0.0 0.0 EGYPT : 1090.0 487.8 0.0 130.1 0.0 0.0 MOROCCO : 29.5 49.9 0.0 18.0 0.0 0.0 TUNISIA : 25.0 20.0 0.0 0.0 0.0 0.0 :WESTERN HEMISPHERE : 3739.0 4112.2 61.9 151.2 4.6 0.0 BARBADO : 3.2 6.1 0.0 0.0 0.0 0.0 C RICA : 129.4 71.3 0.0 0.0 0.0 0.0 CANADA : 90.2 251.3 6.7 22.1 0.0 0.0 COLOMB : 295.5 582.3 0.0 0.0 0.0 0.0 CUBA : 75.0 200.0 0.0 0.0 0.0 0.0 DOM REP : 243.1 196.8 0.0 0.0 0.0 0.0 ECUADOR : 0.0 45.0 0.0 0.0 0.0 0.0 F W IND : 19.5 17.1 0.0 0.0 0.0 0.0 GUATMAL : 248.8 394.9 0.0 0.0 0.0 0.0 HONDURA : 82.1 96.7 3.5 0.0 0.0 0.0 JAMAICA : 64.8 57.6 1.5 0.0 0.0 0.0 LW WW I : 0.5 1.8 0.0 0.0 0.0 0.0 MEXICO : 2283.0 1822.9 30.2 80.1 4.6 0.0 NICARAG : 11.6 8.7 0.0 0.0 0.0 0.0 PANAMA : 103.7 99.0 0.0 0.0 0.0 0.0 PERU : 36.5 217.5 0.0 23.5 0.0 0.0 TRINID : 24.0 15.0 0.0 0.0 0.0 0.0 VENEZ : 28.2 28.2 20.0 25.5 0.0 0.0--------------------------------------------------------------------------------TOTAL KNOWN : 11315.9 9449.6 285.8 5
37.0 4.6 0.0TOTAL UNKNOWN : 3786.6 2681.9 0.0 0.0 50.8 0.0--------------------------------------------------------------------------------TOTAL KNOWN & UNKNOWN : 15102.5 12131.4 285.8 537.0 55.4 0.0EXPORTS FOR OWN ACCT : - - 21.9 34.3 - - OPTIONAL ORIGIN : 141.8 127.1 - - 0.0 0.0--------------------------------------------------------------------------------
These export figures also fall right inline with the Dollar’s declining value. The Yen hit a 15 year high against the Dollar last week and the Chinese Yuan continues to appreciate, in spite of their officially pegged boundaries to the greenback. We also saw the Dollar depreciating against several African currencies, including the Egyptian Pound.
Further examination of the table reveals little in the way of exports to the Euro zone, with Spain and United Kingdom being the only two countries to make the list. Obviously they have an added advantage in being able to grow their own crops but, with the severe weather problems they’ve had this summer and the impact on their crops, one would think we might see an uptick in exports to this area.
I read an interesting article this weekend detailing the competitive devaluation race between Euro zone, United Kingdom and the United States. The current political plans are similar among all three. All three must devalue their currency in order to make their exports more competitive and force increased domestic consumption upon their people. This is the only way they can grow their way out of their recessions while keeping domestic inflation in check. However, at the same time they are printing money to devalue, they are forcing the individual savings rate to increase (the U.S. has gone from 0 savings to 6% in the last year), this also reduces domestic demand, stifles small business and lowers taxable receipts. Keeping this in mind, it becomes a race to see who can implement the process the most efficiently and beat the other faltering countries to the end game of sustainable growth and manageable debt.
This blog is published by Andy Waldock. Andy Waldock is a trader, analyst, broker and asset manager. Therefore, Andy Waldock may have positions for himself, his family, or, his clients in any market discussed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity markets. The commodity markets employ a high degree of leverage and may not be suitable for all investors. There is substantial risk in investing in futures.
