- The September WASDE is imminent.
- Everything is pointing towards increased corn acreage.
- We may be surprised with a downwards revision, though, as it remains dry in Brazil.
Nixal’s Forecast
Last week, the 2020/21 (Sep/Oct) average price for Chicago corn sat right in the middle of our forecasted range (5.1 to 5.5 USD/bu) at 5.31 USD/bu. Our new crop 2021/22 (Sep/Oct) average prices for Chicago corn remain unchanged in a range of 4.5 to 5 USD/bu.
Nixal’s Market Commentary
Last week was a negative one for grains in all geographies. It was especially negative for Chicago corn, which fell 5% (Dec Futures) on the back of logistical problems making corn difficult to transport.
Source: Checkout
We have the September WASDE landing this week, which could prompt increased volatility.
The USDA said it would review area for corn and soybeans, one month earlier than usual. The September WASDE will also mark the first time we see production estimates based on field samples, rather than just farmer polls. Our yield forecast could therefore change.
Talks of area revisions may have influenced last week’s negative run. Before the USDA released its acreage report of 92.69m acres, we were expecting a higher number for two reasons:
1. Farmer returns are strong at present.
2. There’s a record number of Commercial Shorts signaling a record volume of corn hedged by farmers.
The combined acreage of corn and soybeans was at 180m acres, almost an all-time high, so there shouldn’t be much room for a higher number. If there is, we don’t think it’ll increase by any more than 1m acres.
Old crop exports could also be revised down but new crop demand for ethanol and feed seems low to us.
Last month’s WASDE lowered corn yields, in line with our expectations, and we’re not sure if they’ll make another revision. The farmers seem to be anticipating a large crop.
The US’ corn condition was unchanged at 62% good-to-excellent, up 2% year-on-year. In France, the corn condition was also unchanged at 91% good-to-excellent, up 30% year-on-year. The weather forecast for both the US and Europe is favorable for corn, while it remains dry in Brazil. New crop planting in Brazil has started and their second crop harvest is 89% of the way complete. Ukraine has just started harvesting corn.
On the wheat front, there was healthy tender activity, which helped support the market, despite ample availability as harvests across all regions are more or less complete.
To summarise, this coming week will be heavily influenced by Friday’s WASDE. Everything is pointing towards increased corn acreage, but there shouldn’t be much room for a large revision. We may even be surprised with a lower number. Nevertheless, it’s safe to expect some WASDE volatility in the coming days.
Other Opinions You Might Be Interested In…
