The Early Buzz

13/03/12 -- The market has an interesting feel to it at the moment. Grains are fully steady, there are plenty of reports of China buying corn and/or having substantially lower stocks than the official numbers suggest. (The Chinese lying? I couldn't possibly believe that one).

Are we about to see wide scale Chinese buying? Have they already been buying heavily under the table? We can all guess what would happen if that proves to be the case.

The Argies are reckoned to have already sold 5 MMT of their new crop soybeans, with the vast majority of that (4.5 MMT) being Chinese business. They are also said to have sold 7 MMT of their yet to be harvested corn to unconfirmed destinations.

Chinese corn prices on the Dalian Exchange are said to be pushing the equivalent of USD10/bushel. Agrimoney report this morning that domestic cash prices "have topped 2,500 yuan (USD400) a tonne, compared with USD325 a tonne for imports from the US, freight included."

World corn stocks are said to be around 125 MMT, with a little bit less than half of that total supposed to be in China. It does therefore seem more than a little odd that domestic prices are so high in the country that holds almost half the corn stocks in the world does it not?

With almost 60 MMT on their hands you'd have thought that whoever is sitting on it (the government can't own much of it or they'd be auctioning it off) would be tempted by the highest corn prices in the world wouldn't you? I mean at the end of the day it's "only" corn.

It would seem that it's "only" corn that the Chinese haven't got though. Still, never mind they've no doubt got another record crop on the way this year, just like they always do.

Whilst we're on the subject does anyone else find it just a bit odd how despite having a monster consumption figure of 191 MMT in 2011/12, the USDA just managed to top that with a Chinese production figure a squeak higher at 191.75 MMT? Consumption in 2010/11 was "only" 176 MMT. Guess what production was? That's right 177 MMT!

You may be feeling rather bullish right now, but we haven't started discussing Europe yet...