Corn was moderately lower Tuesday as traders waited to see if China will buy any US grain during this week’s summit in Washington while drier weather conditions should allow farmers to ramp up harvest activity.
Futures fell as much as 1.4 percent in Chicago. Prices had risen sharply in the previous session, in part on optimism China will start chipping away at a pledge outlined by the White House for $17 billion in agriculture purchases beyond an earlier deal for soybeans.
China as recently as 2022 imported over $5 billion worth of American corn, raising expectations that any program aimed at fulfilling a buying target would need to include the most widely grown US crop. So far, there are few indications of China purchases ahead of Thursday’s summit other than recently passing the halfway mark on a 25-million-ton soy target.
‘Corn would likely be a large portion of these import targets based on historical Chinese import data,’ StoneX risk management consultant Matt Campbell said in an email. However, he pointed out that China’s domestic corn prices are relatively cheaper than US supplies, making purchases uneconomical.
‘The US is not competitive price-wise today,’ he said.
Prices for corn and other crops are hovering near the highest levels in years after hot summer weather squeezed yields while fighting between Russia and Ukraine in the Black Sea disrupts grain exports and the US-Iran war keeps oil prices elevated.
Uncertainty surrounding the summit is limiting further gains for now. That’s as harvests of both corn and soybeans advanced more than analysts expected while US farmers also caught up on winter-wheat planting, according to US Department of Agriculture data released late Monday.
Conditions are expected to remain relatively dry in the eastern half of the US Midwestern crop belt, though wetter weather is seen in the northwestern part of the region.
Meanwhile, a joint report published Tuesday by the National Corn Growers Association and the American Soybean Association said that farmers remain under ongoing economic pressure even with the recent gains in prices. Many farmers have been receiving less for their crops than the costs for equipment, seed, fertilizer, fuel, chemicals and land necessary to produce them.
‘Many growers are still managing financial pressure that has built over multiple crop cycles,’ said Krista Swanson, chief economist at the NCGA and an Illinois farmer.
The situation has been exacerbated by the war in Iran, which has sent diesel prices to record highs just as farmers are using heavy machinery to bring in their fall crops.