Insight Focus
- Argentina’s new president has devalued the Peso by more than 100%.
- This may boost wheat exports, and has weighed on world market futures.
- The corn market has also fallen in the last week.
Forecast
No changes to our forecast for Chicago Corn in a range of 3,9 to 4,15 USD/bu for the average of the 23/24 (Sep/Aug) crop but with an upside bias. The average price since Sep 1 is running at 4,76 USD/bu.
Market Commentary
Negative week for grains in a mix of strong US exports and the devaluation of the Argentinian peso.
We had the expiry of the December futures (Corn and Wheat) in the US last Friday and the market was down by the start of last week still fully impacted by the Dec WASDE of the previous Friday.
US Corn inspection were down 40% week on week but mostly within expectations.
The market is also looking at Argentina with the new president having suspended new applications for export licenses last Monday, they devaluated the peso by more than 100% down to 800 ARG/USD vs. 365 of the previous official exchange rate, they increased export taxes by 15% and finally after all those changes they resumed accepting new applications for export licenses. The Argentinian move will probably boost Wheat exports which pressed the market lower.
The France Ag Ministry increased their Corn production forecast slightly to 12,8 mill ton vs. 12,5 of their November number, immaterial to the market.
US Corn area under drought condition is now 44% or one point higher week on week. In Brazil, the summer Corn crop is 65,9% planted vs. 76,6% last year. Argentinian Corn is 49,3% planted and condition improved again to 40% good or excellent or four pts higher week on week.
In the Wheat front and despite the negative week we had an end of the week rally in the US thanks to strong export demand. The UK officially published Wheat production in 2023 at 14 mill ton or -10% year on year due to lower area and lower yield. This was already priced in.
Also somehow expected and anticipated a couple of weeks ago, France (the Ag Ministry) reduced their Wheat area 5% lower to 4,49 mill ha. The reason is the excess rains since October which had resulted in some areas not being planted which will probably be planted in the spring. After the publication they suggested we could even have less acreage than what their official projection is showing given the very rainy October.
US Wheat area under drought conditions fell five points in the week to 32%. Argentinian Wheat is 55,2% harvested vs. 53,8%.
The trade flow out of the Black Sea is having some delays but mostly caused by weather. Ukrainian weekly exports increased by 67% week on week.
In the weather front, heat and dry conditions hit Brazil in the last couple of days but lower temperatures and some rains are now expected this week. US weather is expected to see warmer than average temperatures.
Our view remains of a heavy grains S&D with the only potential changed coming from lower production in France, but that should already be priced in. We continue to see more downside than upside risk.
Negative week for grains in a mix of strong US exports and the devaluation of the Argentinian peso. Our view remains of a heavy grains S&D with the only potential changed coming from lower production in France, but that should already be priced in. We continue to see more downside than upside risk. No changes to our forecast for the new 23/24 crop for Chicago Corn in a range of 3,9 to 4,15 USD/bu but with an upside bias. The average price since Sep 1 is running at 4,76 USD/bu.
