Dalian Futures Continue to Widen Against US Corn Futures

December 19, 2017 11:05AM CST

Chinese Dalian futures traded up to another new high this morning before setting back into its close.  The market was up over 1.5% yesterday, and is up over 20% on the year so far.  Chinese mills have purchased 1.2 million tonnes of US corn since the start of November as the widening gap between Dalian and US corn prices make imports attractive.  Chinese corn futures are about $139/tonne more expensive than CME corn futures price, which is the most since February 2016.  US exporters announced the sale of 168,000 tonnes of sorghum to China yesterday.

The open interest in corn went up 9,402 contracts on Monday, with trend following speculative funds continuing to press the downside.  The managed money trader increased their net short position by 36,673 contracts to 197,192 contracts as of December 12th.  With corn’s relative performance for the year down 1.28% so far, the aggregate re-balancing figures being calculated at current prices have the GSCI and BCOM index’s reducing their length in the reweighting process by a meager 31,000 contracts.  This would take place over the January 8-12 period and have limited effect on the market. Support comes in as low as 3362 with resistance at 3516 and 3534.

Corn Mar '18 Daily Chart

Corn_Mar18_Daily_Chart

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