Markets have bounced higher this morning with corn and soybeans both up 18.
Weekly export sales this morning showed old crop sales slightly above estimates at 21.9 million bushels for the week. New crop sales were very strong at 224 million bushels. This has been the trend over the past couple weeks as China continues to buy US new crop corn and soybeans.
Ethanol production leveled off last week, though there are still optimistic signs for the industry as the summer travel season approaches. For the week ending May 21, ethanol output fell 2% to 42.5 million gallons/day. Ethanol inventories fell to the lowest level since 2016 as the industry adjusts production capacity to current blending demand levels.
China is clamping down on some corn imports amid concern that overseas purchases have spiraled out of control, prompting several feed mills to cancel their U.S. cargoes. Chinese customs authorities are restricting imports into free trade zones, which aren’t counted toward an official annual purchase quota, according to people with knowledge of the matter.
China’s crackdown on corn purchases is targeted at businesses that have set up blending facilities in the free trade zones, according to the people familiar with the matter. These facilities allow firms to mix the imported corn with other raw materials to produce livestock feed that enable them to profit from zero-tariff imports, the people said.
US weather is bearish and the rain coming though should continue to weigh on prices, but it looks like we are going to pause for now. Demand is still really good for corn and the funds have liquidated over half of their position.
Have a Safe Day!