Corn Is Surging as U.S. Sees China Imports at All-Time High
(Bloomberg) -- Corn prices climbed above $6 a bushel to the loftiest level in almost eight years after the U.S. said it expects China to buy an all-time high amount of the grain off global markets.
A shortage of supplies and a need to replenish hog herds after a major outbreak of deadly African swine fever will continue to fuel China’s appetite for corn imports, with the total for the current season seen at 28 million metric tons, the U.S. Department of Agriculture’s Beijing office said on Wednesday. That would be the most on record based on Bloomberg data going back six decades.
The U.S. also predicts China, the top pork producer, will slash global corn purchases next year down to 15 million tons as it attempts to reduce reliance on foreign grains. Despite the sharp cut, that would still be the second-highest amount on record.
“It’s a conservative figure” that will likely “be walked up in the coming months,” Rich Nelson, chief strategist at Illinois brokerage Allendale Inc. said in an interview.
The forecasts imply further demand for already tight U.S. corn supplies, especially given concern about the condition of growing corn crops in Brazil. The majority of additional China purchases would probably be U.S.-based, Nelson said.
China is expected to rely more on rice and wheat stocks in the next season due to the high price of corn. Still, demand for the grain isn’t expected to change until late 2021 or 2022, USDA officials in Beijing said in a statement.
Corn futures on the Chicago Board of Trade climbed as much as 2.84% on Wednesday to $6.0875 a bushel, the highest since May 2013. Prices have nearly doubled in the last year as China scooped up massive amounts of the grain to replenish pig herds that were decimated by the deadly African swine fever.
Fresh outbreaks of the deadly virus have emerged, triggering concern that China’s demand for feed imports may wane and cool the biggest crop futures rally in almost a decade.
In other markets, soybeans rose as much as 1.5% to $14.795, the highest in nearly seven years.
Benchmark wheat futures gained as much as 2.8% to $6.80 a bushel, the priciest in nearly two months as cold weather in the U.S. Midwest threatens damage.
Sugar and cotton advanced, still supported by dry conditions in cane crops for top shipper Brazil, and in West Texas, the biggest grower of the fiber in the U.S.
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