2 September 2020
- We remain of the opinion that purely from the spot supply perspective, the on-going rally makes little sense. The supply chain of the global corn market is well balanced at any point we observe. If it is not supply driving this market up, we must look at the demand side of the equation.
- Our proprietary metric for weekly global spot corn demand persistently suggested the income of a positive short-term demand shock during weeks #32-34. The expected surge in demand is clearly visible, but it also coincides with the surge in supply as discussed above. The demand surge has only intensified in the past week or so, which in our mind explains to a large degree the price strength.
- Last week we wrote that “…recent evidence which suggested that credit expansion has accelerated again.” This is clearly displayed in the Chart of the Week, where we monitor the credit liquidity through the tool called “Credit velocity”. This tool measures the momentum at which credit is created.