- Wheat crops in Canada and Europe may underperform following poor weather.
- Hurricane Ida is still causing logistical disruption in the USA, limiting grains exports.
- Brazil received some much-needed rains, but these have delayed new crop corn plantings.
Nixal’s Forecast
Our 2021/22 (Sep/Oct) average price forecast for Chicago corn remains unchanged in a range of 4.5 to 5 USD/bu. The average price since the start of the new crop has run at 5.1 USD/bu.
Nixal’s Market Commentary
Wheat fuelled a grains rally last week, with poorer production from Canada and Europe on the cards. Wheat rounded off the week up 5% and 4% in Europe and the US respectively. Corn, on the other hand, ended the week up 3% and 1% in Europe and the US (Chicago) respectively.
Chicago corn’s September contract expired last Tuesday at 5.3 USD/bu with a 17c contango to the December future. We’re now left wondering whether the December future will try to close the gap with the September expiry and fall to 5 USD/bu.
The US’ weekly export inspections were 50% lower week-on-week, but this was somewhat expected as it’s related to the logistical disruption caused by Hurricane Ida.
The US’ corn condition fell to 58% good-to-excellent, down 2% year-on-year and 1% from the week before. The lower quality also contributed to the rally, especially after the September WASDE showed a yield increase that the market was not prepared for. Harvesting in the region is now 4% complete, in line with the five-year average.
Elsewhere, in Brazil, new crop planting continued and is 16% complete. This is down 4% year-on-year as rains delayed planting, but these very rains were very much needed as the country has suffered its driest year on record.
Franceagrimer left its corn production forecast almost unchanged at 12.4m tonnes, which, if it materializes, will be France’s best production for the last four years.
France did, however, reduce its wheat production estimate from 36.7m tonnes to 36.06m tonnes, lifting wheat prices 2% last week. Across Europe, the quality of the wheat is a concern following a very wet summer.
Elsewhere on the wheat front, exports out of Canada were down 65% week-on-week and the country’s production forecast was cut to 21.7m tonnes (down 38% year-on-year) on the back of dry weather.
As we enter corn’s harvesting season, we should see further pressure on prices. The US’ corn quality is one to watch as the yield number from the USDA’s September WASDE seems too optimistic.
Other Opinions You Might Be Interested In…
