2 October 2020
- Even if our data for the supply of corn on the spot continues to indicate elevated supply, the view of our proprietary model further down the line is markedly different.
- Our proprietary metric for weekly corn Implied Forward Demand continues to suggest strong demand during October (our visibility window for forward demand is +4 weeks) and so far, the market has responded in fashion. It is worth mentioning that the model remains sceptical for the demand strength downstream. This is a sign that buying is concentrated predominantly by mid-stream players, such as trading houses. As we all know, their interest can evaporate on the first signs of difficulties in the off-take from end-users so caution should be applied.
- The momentum at which credit is created remains strong and is having a direct impact on the corn price formation. The importance of macro factors increased again this week, while the influence of supply-related factors on the price decreased. Currency markets still refuse to support the on-going strengthening of the grains sector, which is an important difference compared with previous periods of price appreciation, and another sign of potential troubles for the price ahead.