- Corn rallied in all geographies last week.
- This is largely because Brazil’s still suffering from a lack of rainfall.
- China’s continued buying remains a key factor too.
Nixal’s Forecast
Our 2020/21 (Sep/Oct) average price for Chicago corn remains unchanged in a range of 4.7 to 5 USD/bu.
The average price since the beginning of the crop (Sep/Aug) has run at 5.08 USD/bu.
Nixal’s Market Commentary
Last week, corn rallied in all geographies, and there are several reasons for this.
Old crop corn supply is tight and Brazil’s safrinha remains a concern due to dry weather.
US exports also held strong. By the end of the week, its sales of old crop corn were higher than expected and now sit just 1.4m tonnes below the USDA’s forecast (70.5m tonnes). Dry weather in the region also lifted prices higher.
Currencies played an important role too, as the Dollar valuated and the Real rallied.
The movement in European Corn was distorted by the delivery against the June contract, which expires today.
As predicted in our last Opinion, downward revisions to Brazil’s corn crop started to emerge last week and estimates now sit below 100m tonnes.
Agrural now thinks Brazil will produce 90.9m tonnes of corn, down 11.7m tonnes year-on-year, as the dry weather continues to cause problems.
This downgrade should be echoed in Thursday’s WASDE and Conab reports, both of which placed production at over 105m tonnes last month.
Elsewhere, in the US, planting is 95% complete, up 3% year-on-year and 8% ahead of the five-year average. This bodes well for yields. As it stands, the corn is ranked at 74% good-to-excellent, up 2% year-on-year. This pressured the market on Wednesday.
In Ukraine, planting is 99% complete. For France, its corn is ranked at 91% good-to-excellent, up 6% year-on-year.
Wheat moved up alongside corn last week.
The US’ wheat condition improved 1% and is now ranked at 48% good to excellent, down 3% year-on-year. Its condition, on the other hand, remains unchanged at 80% good-to-excellent.
As mentioned, the USDA’s June WASDE will land on Thursday. It could show higher new crop corn acreage but may also leave things unchanged whilst it gathers more information.
We currently think corn and soybean acreage will up 5m tonnes by the end of the crop.
For the old crop, focus on exports as US sales near the USDA’s 70.5m tonne forecast. We think there’s room for higher exports but once more, the USDA may not make changes this month.
Ultimately, you should brace yourself for some volatility this week as traders position themselves ahead of the WASDE.
Other Opinions You Might Be Interested In…
- Corn: Brazil Needs Rain, and Fast
