Author Topic: Sorghum and Barley Exports to China Get Unexpected Boost From Corn Prices  (Read 2781 times)

TradersCom

  • Administrator
  • Hero Member
  • *****
  • Posts: 2643
  • Country: us
    • View Profile
An example of unintended consequences with market forces at work in China. After a surge in Chinese corn prices from a  government clamp down on trucks being overloaded buyers have sought alternatives. Chinese corn prices have risen 16 percent since the start of October after the nationwide crackdown on overloading lorries to protect roads and reduce accidents. The result has seen a shift to cheaper feed grains like sorghum and barley from top exporters the United States and Australia.

Supplies of corn usually transported from northern growing regions have been impacted. The Chinese  government also introduced subsidies for corn processors and wet weather slowed the latest harvest which buoyed prices. This comes at a time when Corn, Wheat, Rice, Soybean Production Stocks Rise to Record says the International Grains Council. For grain exporters this has been a welcome and unexpected boost.
 

The impact has aided suppliers of grains that can be used as alternatives to corn in animal feed.  There has been a notable lift in shipments of sorghum from the United States and barley from Australia.

Quote
“Inspections on overloading … have limited overall transportation capacity and pushed up the cost (of local corn). Imported grains now have more price advantage,” said Cherry Zhang, an analyst with Shanghai JC Intelligence Co. Ltd.

The surprise boost comes after the International Grains Council )IGC) raised its forecasts for both corn and wheat production seeing global grain stocks now set to  surpass 500 million tonnes for the first time at the end of the 2016/17 season. The IGC has the total grain carryover stocks at the end of the season at 504 million tonnes, up from a previous projection of 498 million and the prior season's 475 million tonnes.

Quote
"Wheat and maize account for nearly all the expected stocks expansion," the IGC said


Notably we have all so seen a strong rise in consumption, the supply coming on is so overwhelming. This is keeping with the deflationary trend for world food prices during 2017 for now though we are seeing spots of inflation starts to rise in some developed economies.

The IGC raised its forecast for the 2016/17 world corn (maize) crop by 7 million tonnes to a record 1.042 billion tonnes, mainly reflecting improved prospects in the United States and Brazil. This is keeping with the US Department of Agriculture (USDA) revision of the record US corn harvest even higher earlier this month.

The new trucking rules have been impacted as coal freight on its railways has been given priority as coal prices have also surged as winter starts.

U.S. sorghum shipped to south China currently costs around 1,660 yuan ($240) per tonne compared with domestic corn arriving at Shenzhen’s Shekou port for 2,040 yuan per tonne. Sorghum prices have strengthened deterring forward purchases. Feed barley is about 1,500 yuan per tonne.

Reuters reports China has booked more than 20 vessels of U.S. sorghum since late October for arrival by February, said a trader in China, declining to be identified as he was not authorized to speak with media. That would amount to more than 1 million tonnes.

While overall volumes of sorghum imports are still seen dropping in 2016/17 from previous years, suppliers had not expected a sudden jump in demand just after China had harvested a bumper corn crop. At least three vessels of Australian barley are on their way to China, said a Singapore-based trader, adding that there had been a significant upturn in inquiries. China is the world’s top sorghum importer and its No.2 importer of barley.

The move in prices comes after China abandoned a state stockpiling policy that had seen it amass about 250 million tonnes of corn. It had been looking to offload grain but suspended auctions to encourage purchasing of new crop corn.

Meanwhile, the China-based trader said that new bookings for corn substitutes may begin to ease as buyers expect more corn to reach southern China soon after the government takes measures to boost transport capacity.
And

Source: Reuters, TradersCommunity

More Commodity News
Harsh Weather Continues to Batter Beef Cattle Industry in Australia
Corn, Wheat, Rice, Soybean Production Stocks Rise to Record says Grains Council
From Istanbul to Vienna The OPEC Oil Production Deal Schedule
USDA says Cattle in U.S. Feedlots at 8 yr Feb High

Check out OOTTNews.com for the latest news and data on Forex and Oil markets.

From the Traders Community News Desk
Markets Claws of Chaos

TradersCom

  • Administrator
  • Hero Member
  • *****
  • Posts: 2643
  • Country: us
    • View Profile
Another positive development for Australian farmers: First ship of corn to Sth Korea from Ord Rvr in WA. Opp time of year to East Coast via Lee Corporal ‏@fa078a2f38c645d

Historic shipment for Kimberley's Ord Irrigation Scheme, as corn ship departs Wyndham for South Korea

Around 10,000 tonnes of corn has been shipped out of the remote Kimberley port of Wyndham this week, as part of a new export deal for farmers in the Ord Irrigation Scheme.

The Tao Star was loaded over three and half days in Wyndham and is now en route to South Korea, where the corn will be used in the confectionery market, most likely to be turned into corn chips.

The last crop from the Ord Irrigation Scheme to be exported out of Wyndham was raw sugar back in 2007.

David Cross from the local Ord River District Cooperative (ORDCO) said it was great to have farmers back on the wharf at Wyndham and exporting food.

"This is a significant moment," he told ABC Rural while watching the corn being loaded.

"Albeit a relatively small tonnage and one shipload, it signifies growth and development of the Ord and northern agriculture.

"I see this as a first step in that overall bigger picture [of developing the Ord] and it's exciting."
Mr Cross said ORDCO had purchased new equipment to make sure the corn could be loaded. He said the farming community was hopeful of making this an annual shipment.



Working in partnership with ORDCO has been the New South Wales-based Robinson Grain Trading Company.

Grain trader Trent Robinson said the harvest window for Ord Valley corn was distinctly different to the eastern states of Australia, creating a big export opportunity for Ord growers.

"There's definitely a demand there for exporting corn overseas at this time of the year," he said.

"We have a client in Korea who likes to purchase corn at this time of the year, but with the eastern states he has to buy it in March and carry it through [which costs him money].

"So here in the Ord Valley, they harvest corn in September-October and the timing is just perfect for our client in Korea."
Mr Robinson said it was exciting to be in Wyndham and the Ord irrigation expansion was creating some big opportunities.

"This shipment is going well, the quality seems to be really good and our client should be well and truly happy with it," he said.

"He's there to buy more in years to come, so if we get this one [shipment] away and they're happy with it, it should hopefully be an annual thing."

Watching the Tao Star being loaded with corn, Wyndham Port manager Steve Forrest said it was a welcome site.

"It's great to see a cargo that's come from Ord Stage one and Ord Stage two, it's great to see an agricultural product go out over the port again," he said.

"We've been effected by the mining down-turn here at the port, with our biggest customer, nickel, going into care and maintenance.

"So to be here and see the wharf going flat out and blokes running around doing stuff is great to see."
Mr Forrest said the expansion of the Ord Irrigation Scheme near Kununurra would hopefully benefit Wyndham as well.

"I would hope this current facility won't be big enough to handle the product from Ord Stage One and Two in the future," he said.

"If Ord Stage Two really gets up and running, my guess is this current structure won't be big enough to handle the ships they'll need, in which case we'll need another wharf."

Original Article

http://mobile.abc.net.au/news/2016-11-25/kimberley-corn-ship-departs-wyndham-for-south-korea/8049956?pfmredir=sm






Markets Claws of Chaos

 


Google Ads