Friday, July 10, 2015

Corn - Will It Break Up At Last?

In May 2015 I posted this text about corn. Since that time corn had found a bottom at $3.85 per bushel. Then it went up in a parabolic way.

Today USDA published another report on agriculture commodities, corn included. To be honest, corn looks the best (much better than its sisters: wheat and soybeans). Please, look at the chart below:

Once again, USDA forecasts a deficit between production and consumption (with consumption higher than production). What is more, this deficit is getting wider. It favors price increases.

Another chart:

The world stocks of corn are getting lower, which is attributable to the widening deficit between consumption and production.

Now the question is - are the prices of corn going higher? A quick look at the chart below confirms that these days the corn prices are a bit below their strong resistance:

While fundamentals favor corn prices going higher, it could take some time for corn prices to break up. We'll see.

Last but not least. China's economy is really weakening. The chart below evidences it quite well:

As everybody can notice, USDA estimates that the forecast of wheat consumption in China is going down abruptly. Historically, China used to consume around 124 million metric tons of wheat annually. But according to the today's forecast, in the coming season China will have consumed only 116.5 million tons of wheat.

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