A purchase of 800k tons Friday topped a volume greater than 100k for the fourth time this week, resulting in interim purchases of 3.876 million tons, announced the USDA. All sales made on a single same day to the same destination with volumes over 100k tons are required to be reported to the department.
It may not be what it seems, however. “Recent purchases, of almost 4 million tons, may have a more political than commercial motivation, since of the total already committed on behalf of China in the USA– 23.6 million tons–only 7.8 million tons have been loaded so far, suggesting that their need for corn would not be an emergency or immediate,” say analysts at Agrinvest Commodities.
Corn prices have declined in recent years despite deals with China, which is expected to become the world’s largest corn importer due to its increasing purchases of the animal feed after storms and drought damaged their local supply. While farm bankruptcies have been on the increase, up 25% in 2019 alone, and with the debt-to-asset ratio for farms steadily increasing for the past 15 years, the recent large purchases of corn are driving up corn prices globally, and may even contribute to food inflation in some economies.
By Milan Sime Martinic