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U.S. cash grain market becomes divided as global demand declines

Apr 29, 2019 at 07:21 AM CST
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We are starting to see a division take place in the U.S. cash grain market. Exporters are not pushing for deliveries right now as global demand for our offerings has been less than stellar in recent weeks. Basis values, the difference between commodity futures and cash bids, have weakened as a result. This is mainly from competition in the global market, as buyers can source needs from alternative sources at sizable discounts to the U.S. For corn, this disadvantage for the U.S. has been as great as $20 per metric ton in recent weeks, and for soybeans the spread has reached $15 per metric ton. The spread between the U.S. and other sources has widened to a point where imports would make economical sense for coastal processors, mainly for corn. Not only is price affecting U.S. exports, but so is commodity demand on a whole. The most publicized remains the spread of African swine fever in China. A reported 200 million Chinese hogs have been culled in an attempt to contain the disease. As a result, China no longer needs to import feed grains in the volumes they have been. This is mostly impacting soybeans at the present time.