Forecast
No changes to our price forecast for 21/22 (Sep/Oct) Chicago Corn to be around 6,6 USD/bu in average for the crop.
The average price since the new crop started is running at 6,56 USD/bu.
Market Commentary
Grains had a negative week with the first four cargoes having sailed out of Ukraine. US grains suffered more as hot and dry weather in Europe resulted in smaller loses. The focus continues to be Ukraine and weather.
Despiteall the uncertainties we finally had last Monday the first cargo leaving the Ukrainian port of Odessa carrying Corn which pressed all grains downs to start the week. Another 18 vessels have been loaded and scheduled to sail since last Monday and during the coming days. At least three of them had sailed at the time of writing.
The tensions between the US and China due to US House speaker Nancy Pelosi visiting Taiwan did not help US grains, as it raised fears China could retaliate by reducing purchases of US agricultural products.
The French government activated a crisis unit to deal with the worst drought on record and said things can get worse. They started restricting water usage prioritizing drinking and restricting irrigation for farmland. The Agricultural Ministry published their first Corn production forecast for 2022 at 12,7m tonnes which is 18,5% lower than in 2021.
US Corn condition was 61% good or excellent unchanged from last week and vs. 62% last year. Somehow strange given the excess hot and dry weather so we would expect conditions worsening in the coming reports. In Brazil, safrinha Corn is 71,1% harvested.
In the Wheat front, both Germany and France increased their Wheat production forecast. The German farmer association increased their Wheat harvest forecast by 1,1m tonnes to 21,4m tonnes very much in line with last year’s harvest. The EC is forecasting 21,7m tonnes. The French Agricultural ministry increased Wheat production by 1m tonnes. Is not only less area but also lower yield due to excessive dry weather.
US Winter Wheat is now 82% harvested vs. 90% last year. Russian Wheat is 32% harvested vs. 24% last year. The weather forecast for this week is showing dryness to stay in most of the US Corn belt. In Brazil the weather is expected to remain dry as well through most of the center south region. Europe is expected to have hot and dry weather as well with some rain expected for next weekend in the north.
We have now trade flows out of Ukraine slowly ramping up which should put some pressure mostly on Wheat which is being harvested now. But Corn is being hit by the very hot summer Europe is seeing and the US in less extend.
We have the August WASDE this week Friday. We are expecting US and EU Corn estimates to deteriorate as hot weather continues and we are in a key moment for yield development. We would expect some support in Corn if worse conditions are confirmed.
Please note, corn commentary will take a break for a few weeks and return at the end of August.
