Insight Focus
- Corn crops at risk from hot and dry weather in Europe and US
- 20m tonnes of grains and oilseeds are stuck in Ukraine
- A safe corridor for Ukrainian exports by sear doesn’t look likely any time soon
Nixal’s Forecast
No changes to our price forecast for 21/22 (Sep/Oct) Chicago Corn to be around 6,6 USD/bu in average for the crop.
The average price since the new crop started is running at 6,5 USD/bu.
Nixal’s Market Commentary
Positive week for Corn but negative for Wheat due to a Friday selloff as rains are forecasted to return to Europe. Still Wheat conditions have continued to worsen. Ukraine finished planting in 21% less area year on year.
Corn in Chicago started the week negative as planting is virtually complete but it then rallied during the rest of the week on the back of hot and dry weather across the US and Europe.
The MARS bulleting published by the EU signaled poor weather in central and western Ukraine will lead to poor yields in this regions while eastern parts of the country should not suffer.
Ukraine completed spring planting last week said the Agricultural Ministry reaching 13,4 mill ha vs. 16,9 mill ha planted last year or 21% lower yoy. Spring Wheat planting reached the same area as last year, but area for Corn planting was 15% lower.
Export flow out of Ukraine remains a challenge and a first vessel with Ukrainian Corn arrived in Spain last week. Still some 20 mill ton of grains and oilseeds are still stuck.
In Brazil, safrinha Corn is 6,5% harvested.
US Corn planting is now 97% complete vs. 100% last year but full in line with the 5 year average. Corn condition fell one percentual point to 72% good or excellent vs. 68% last year. French Corn condition fell one percentual point to 87% good to excellent vs. 90% last year.
In the Wheat front, US winter Wheat condition improved one point to 31% good to excellent still far from 48% last year. Winter Wheat is now 10% harvested vs. 4% last year. French Wheat condition fell again another percentual point now 65% good to excellent vs. 81% last year.
France is expected to see 40ºC this week which is a problem for the critical stage of Wheat condition which is in the stage of reaching its full potential.
Russia’s Wheat crop is expected at 87 mill ton by some local analyst vs 81 mill ton the USDA is projecting. Russia has luckily have perfect weather and plenty of fertilizer.
Dry and hot weather is expected again this week in northwestern Europe with France possibly reaching 40ºC, but a front will also arrive by mid week brining good amounts of rain. Also hot and dry weather entered late last week in the US and is expected to remain through the beginning of this week. Brazil is expected to see dry weather through the coming weeks with lower temperatures expected in the south and frost only in higher altitudes but not specially in crop areas.
We continue to expect the market to remain well supported with volatility depending on how strong the heat is in Northern Europe and the US and the expected rains by the second half of the week in Europe. The only downside risk continues to be a potential safe corridor allowing Ukrainian exports by sea, but appears not to be happening any time soon.
