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China Cancels Corn Purchases

More signs that high prices are rationing corn demand were found in today's export sales report, which showed reductions in both old and new crop business.

Old crop corn sales for the year were reduced by some 358,000 bushels, while new crop cancellations dropped 2012 by 5.2 million bushels. China cancelled at least 9.45 million bushels of new crop, which likely occurred when feed buyers there sold back earlier purchases to capture gains. Recent rains have solidified China's hopes for a big domestic corn crop, while slowing growth there could reduce demand as well.

Today's weak sales totals didn't come as a complete surprise. Not only has business dropped the past few weeks, but export basis at the Gulf has fallen off a cliff, falling 42 cents from early July highs.

Soybeans remain the bright spot of the export scene, with both old and new crop sales totals advancing. China took another 7.3 million bushels of old crop soybeans in the latest week, another indication of how the bad crop in South America is shifting late season demand to the U.S. New crop sales were also good, bringing the net for the week to 26.1 million bushels. Foreign customers are also still buying U.S. meal, one reason for the push to record prices earlier this week.

Wheat sales tapered off more than expected in the latest week, with net new bookings of 13.5 million bushels well off the previous period's good numbers. Shipments also were sluggish, lagging the pace needed to keep up with USDA's forecast for the marketing year by more than 50%. Buyers continue to take only single loads for the most part, with key importers on the sidelines.