The Chicago Board of Trade (CBOT) maize price reached a six-month high on 8th September at $142 /MT on strong export demand, particularly from China, and anticipated lower production estimates by the USDA for the 2020/21 marketing year (MY).
Dry weather across the US Corn Belt during spring and the ‘Derecho’ storm impact on crops in Iowa (main maize-producing state) has trimmed crop expectations and supported price rises. According to market participants, expectations are for the USDA to cut its US maize production estimate in the supply and demand report due to be released on 11th September, adding further upward pressure to prices.
In addition, China continues to import significant amounts of US maize on the back of tight domestic supply as many farmers were encouraged by the government to shift from maize to soyabean crops last year, with the aim to reduce the country’s reliance on soyabean imports amid the trade war. According to the USDA’s August estimate, Chinese maize production is expected to fall by 770,000 tonnes to 260 million tonnes in 2020/21. However, production could be smaller than anticipated after three typhoons hit the country’s main maize-growing region recently, flattening crops and pushing maize prices to their highest level in more than five years. As of 10th September, maize price on the Dalian Commodity Exchange (DCE) was CNY 2,356/MT, up 23.3% compared to the start of the year.
China’s maize imports are likely to continue rising in the short term, supporting further increase in US maize prices.