Our average price forecast for 2020/21 remains unchanged in a range of 4.7 to 5 USD/bu (Sep/Oct). The price since the start of the crop (Aug/Sep) has been running at 5 USD/bu on average.
There’s still no sign of rain in Brazil. Its safrinha crop was downgraded by the USDA, Conab and Agrural last week…will it be even lower? We think this is a real possibility and could also be a reason why corn didn’t fall last week.
US wheat and soybean suffered the most last week, however, as new crop supply looks sufficient, and inflation fears sparked a wider selloff.
US corn sustained as old crop supply remains tight, Chinese buying continues and its ethanol production is still increasing. Its corn exports were also strong, as China bought 1.7m tonnes.
US ethanol production broke through the 1m barrel per day mark for the first time in 15 months, which suggests corn consumption will be up for the duration of the year.
Fortunately, corn planting is making good progress in the US and is currently 80% complete, up 2% year-on-year and 12% from the five-year average.
In the EU, Coceral put corn production at 64.7m tonnes now farmers have been drawn in by high prices.
As mentioned, wheat fell last week in the US. This was the case in Europe too, as both are anticipating strong harvests next month following good weather.
However, US wheat condition did drop 1% last week, meaning it’s now ranked at 48% good-to-excellent, down 4% year-on-year. France’s wheat condition remained unchanged at 79% good-to-excellent.
Coceral put EU wheat production at 130.9m tonnes last week, with area and yields up 6% and 4% respectively, following a period of favourable weather.
As we approach wheat’s harvesting season, prices should keep on easing. Wheat is cheaper than corn at present, meaning some feed demand should migrate from corn to wheat.
The USDA should show higher acreage for corn and soybean in the June WASDE.
We still think we’ve seen the high of the market already, with some volatility still in the old crop, but downside risk in new crop futures.
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