Grain markets continue their significant climb. What has turned the markets so rapidly? Extension agronomist Andrew Frankenfield and David Swartz explain that China is a major factor in the market adjustments.
China’s population is over four times that of the United States (1.4 billion versus 330 million), yet China has only 65% as much arable land (useful for growing crops) as the United States does.
So, it is easy to understand the pressure on agriculture for food production in China.
Several recent events have stressed food production in China.
The ongoing outbreak of African swine fever is well known, but last year also brought flooding to many parts of the country. The extent of the crop destruction is now being realized as the country ramps up grain imports to historic levels.
By mid-April, China had tripled imports of corn from the United States for this trading year compared to last year (21 million tons vs. 7 million tons).
China has also purchased record amounts of sorghum from the United States and continues to purchase very high amounts of soybeans.
There are several reasons why China is purchasing this volume of grain, including the loss of corn from other countries due to economic disputes and the need to replace the crops lost in last year’s floods.
This market activity has pushed all the major grain prices to very high levels. Corn is trading at levels not seen for eight years. It was May of 2013 when the corn price was at current levels.
Corn was $3.11 per bushel in late April 2020 but is now over $7 a bushel. Going by the futures markets and the Pennsylvania basis, we could see corn at or over $6 well into 2022.
Does anyone have any 2020 corn and soybeans left to sell? Frankenfield is not telling you what to do with your unpriced grain in the bin, but he is asking this.
What are you waiting for? Do you have a price target or a target date to sell it by? Certainly there are plenty of farmers that sold a couple dollars below the current offer that would love to sell more than a couple loads in the $7s.