I've heard all kinds of rumors and talk that the Chinese could soon purchase anywhere from 2 to 4 MMTs of U.S. corn, and also make purchases of U.S. ethanol, DDGs, and sorghum. Unfortunately, to this point it's just all been talk, I've seen nothing official. Keep in mind, the last time China purchased any real significant amount of U.S. corn was around 3 MMTs in 2013. This has the bears starting to more heavily question the rumors.
The bears are also thinking U.S. and Chinese negotiations might be cooling off bit? The question now is how long can the bulls go without being feed fresh new demand headlines? We also have to remember that crude oil prices have been getting hammered as of late, down about -12% in just the past three sessions.
There are also more headlines of U.S. ethanol plants making closures and or idling facilities. There was talk circulating yesterday that Green Plains plans to idle the 55 million gallon a year at their Otter Tail ethanol plant in Fergus Falls, Minnesota.
Remember, the USDA just recently trimmed their corn used for ethanol estimate by -50 million bushels, let's hope they don't have to cut more from the forecast. Export competition from South America is also becoming more widely discussed and debated. Bottom-line, growth in demand is being more heavily questioned. On the supply-side of the equation, I could argue the U.S. crop has gotten a bit smaller as some rough weather has kept some acres from getting harvested in a timely fashion.
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The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.
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