China has made another record-breaking U.S. corn purchase, according to USDA data released Thursday. The sale of 1.937 million metric tons is some much-needed good news for U.S. farmers weathering low prices, reduced demand and high stocks, says Kevin Ross, president of the National Corn Growers Association.
“The recent corn sales that we’ve had there are very encouraging,” Ross said during a Thursday AgTalks webinar. “Things are definitely looking up.”
USDA has announced a series of daily U.S. corn sales to China since late March, the largest of which — until Thursday — was a sale of 1.762 million tons on July 14.
The status of China’s corn stocks is murky, but Ross and other analysts say there is a consensus that they are relatively low. That, together with low prices in the U.S. and high domestic prices in China, are some of the biggest factors behind China’s recent large purchases from the U.S.
“That difference (in price) has given us opportunity, which we know will help us chew through (U.S. ending stocks),” Ross said, but stressed the market situation for the U.S. corn sector has “a long way to go” to improve market conditions for farmers.
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China has been buying a relatively large amount of corn, but not ethanol, and that’s something that Ross and Craig Willis, senior vice president of global markets for Growth Energy, say they would like to see change. Although China promised to buy U.S. ethanol as part of the “phase one” trade agreement, Willis says that likely won’t happen until China reduces its tariffs.
China is now exempting importers from some tariffs, which brings down the duties on U.S. ethanol from 70% to 45%, but that’s not good enough for trade to resume, Willis said Thursday.
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