21 January 2021
- Supply tightness contributed to the impressive market run in recent months. This is clearly visible from the contraction (y-axis inverted) in our proprietary “Corn Forward Supply Index”. Our projections going forward continue to suggest that the supply will increase. It is important to clarify the targeted time frame of this projection (Feb-March 2021), which is very different from the much-commented USDA estimates published last week.
- Our proprietary metric for weekly corn “Implied Demand” continues to suggest that the positive demand shock is still very much in place. The market has responded in fashion. We have documented this exceptional demand strength in all our publications since Q3 2020. It is worth noting that our model assesses demand as strong along the entire supply chain, not only mid-stream where the speculative buying of physical volume is usually concentrated.
- Our proprietary quantitative research platform for agricultural markets suggests that the importance of macro-related price drivers increased again in this following one month of steady decline. In our opinion, this is a signal that the focus of the market is shifting again away from Supply and more to Demand-related considerations.