The corn market has been slow to react to China’s increase in purchases from the U.S. and to the destructive derecho that swept across Iowa, a new report from RaboResearch Food & Agribusiness says.

“The market’s focus was the August Crop Production report, and only now is it beginning to digest the magnitude of China’s buying,” the report says, adding that when China has upped its purchases significantly in the recent past, U.S. corn stocks were at or below a billion bushels. Now, they’re above 2.5 billion bushels, which will “temper any Chinese buying rally.”

The carry-over amount also will likely affect the price response to the derecho, whose impact will be lessened by record corn crops outside of Iowa. In all, the derecho is likely to reduce the yield nationally by 2-4% and leave ending stocks at 2.5 billion bushels, rather than closer to 2.8 billion bushels.

The report also looked at “food-at-home inflation” (it continues to rise at record levels); cotton (“falls in global cotton demand will drive world cotton stocks to expand over 20% year over year in 2019/20, with further expansion likely in 2020/21”); and an “incredible recovery in fed cattle slaughter,” now up to 97% to 98% of year-ago levels.

It also said “China’s recent strong imports [of soybeans] have largely gone to stockpiles, as their port stocks have significantly increased. So their future buying may slow, particularly if there is a price move to the upside.” Of pork, the report said, “Weaker demand and ample hog supplies continue to limit the upside in lean hog values."

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