23 June 2020
- Our expectations that supply of corn along the supply chain would continue to contact have so far materialized. Therefore, stronger prices since the lowest price during week #18 can be justified.
- The weakness in demand between January and May is clearly visible. Regardless, our proprietary metric for weekly global spot corn demand continues to indicate that a positive short-term demand shock is underway. The price of corn has so far been following closely. Strong price reaction is not warranted, as overall S&D balance along the value chain depends on both supply-push and demand-pull forces.
- The macroeconomic environment keeps improving. As expected, credit is expanding in key consumption regions as economies re-open and demand for credit lines from economic entities grows. Somehow disappointing, after decomposing the price formation on the corn market, we see that the influence of macroeconomic forces has in fact contracted – see Chart of the Week. This results in a hesitant market stance, in spite of the positive macroeconomic developments.