Opinions Focus
- Corn harvesting begins early in France and Ukraine.
- Pro Farmer crop tour indicates lower than expected US corn crop.
- US corn condition falls for the 4th week in a row.
Forecast
The average price for the 21/22 (Sep/Aug) crop for Chicago Corn was finally 6,54 USD/bu vs. 6,6 USD/bu we had forecasted. Our first exercise for the new 22/23 (Sep/Aug) crop points to an average price in a range of 5,8 to 6,3 USD/bu.
Market Commentary
Profit taking last week and a recovery by the end of the week as dry weather continues to support the market. All the initial losses were recovered and most grains closed the week flat.
The final results of the Pro Farmer crop tour estimated 13,76 bill bu of production below the 14,4 the USDA is forecasting. But their Soybean forecast was very much in line with USDA’s and beans fell pulling the grains complex lower.
The major conclusion of the Pro Farmer crop tour is the risk of lower Corn yields given the long period the crop has suffered hot and dry weather. Something also suggested by StoneX which reduced their Corn yield forecast to 173,2 bpa below the 175,4 bpa of the USDA. We will have to wait until the September WASDE to be published next Monday Sep 12 to see if they lower their Corn production forecast. But we have been anticipating for some time we are expecting a lower crop.
The hot and dry weather has anticipated the start of Corn harvesting in Ukraine but also in France. Early yields in Ukraine are showing very poor results suggesting the crop size could even be lower, but is too early in the harvesting season to anticipate conclusions. In France 1% of the planted area has been harvested already, some two weeks ahead of the five year average and three weeks ahead of last year.
US Corn condition fell another percentual point -fourth negative week in a row- and is now 54% good or excellent vs. 60% last year. French Corn condition fell again and is now 45% good or excellent vs. 91% last year. In Brazil, safrinha Corn is 93,4% harvested virtually finished.
The trade flow out of Ukraine is increasing with last week being reported as much as 750k ton of grain exports which is a 78,5% jump vs. the previous week.
US Winter Wheat is now fully harvested. Russian Wheat is 68,5% harvested with an average yield 35% higher year on year.
On the weather front, the US is expected to have dry conditions in the Corn belt with some rainfall in the south and the Gulf Coast. In Brazil, the forecast is showing dry weather except in the south were rains are expected. Weather in Europe is expected to see some good rains in the north west.
On the fertilizer front, one Polish producer that announced it would stop producing, is now saying it will resume production of nitrogen fertilizer worried about food security, mainly pressed by the government who is the biggest shareholder.
With Corn harvesting activities starting we will have the first yield results that will determine the size of the crop. The September WASDE next Monday may opt to wait until their October report to have actual yield data before the downgrade the size of the crop, which we think will happen sooner or later.
With the expectation for a downward revision and tight supply, we continue to expect the market to remain well supported.
