On Friday, corn traded lower due to China’s decision to cancel purchases of the US crop, triggering mixed reactions from market participants.
Corn futures for July delivery declined by -0.40% to $579.40 per metric ton on April 28’s Asian afternoon session.
Other market participants cited cheaper Brazilian corn as a better alternative as some blamed US logistics for the canceled exports.
On April 24, the US Department of Agriculture released a private export that showed 327,000.00 MT of American corn. Previously, it was sold to China for shipment during the 2022/23 marketing year.
According to analysts, the dropping premiums for the Brazilian commodity led China to switch from US purchases to Brazil.
Shippers from America should have been at their peak season. However, the Asian nation, a significant buyer, placed more scrutiny on export potential.
Even without major buyer’s help, the demand has been low. Also, US delivery booking to all non-China destinations hit the second-weakest levels in at least 20 years.
Starting on April 20, corn sales needed to hit 8.50 million tons to achieve the USDA’s estimates. It is a three-year high, more potent by volume and percentage. Nevertheless, it is difficult to do when Brazil has a bumper crop in store, and cancellations are already happening.
High Yields Put Pressure on Corn Market
Despite Midwest producers waiting for the start of planting, in Corn Belt, good progress weighed down on the market.
Farmers are getting the crop in the ground, already ahead of the average planting pace. This may cause concerns for the markets as they look at high acres and yields.
However, traders have pointed out that corn markets already experienced issues even in the front months of the old crop. This came as a result of the canceled purchases of China.
Experts added that there is a possibility for a planting rally. In addition, they predict a turnaround next month if there are ongoing delays and production fears.