Insight Focus
- Chicago corn falls as US planting makes strong progress
- Indian wheat crop hit by severe heat wave
- Ukrainian planted area forecast rises
Nixal’s Forecast
The average price since the new crop started is running at 6,3 USD/bu.
Market Commentary
Chicago Corn fell 3% on expected planting progress this week, while Wheat rallied in all markets on the back of India potentially limiting exports. Corn in Europe rallied. Weather market and the May WASDE this week.
Corn in Chicago started the week negative after a big advance in planting in the US which was above expectations. But the reality is that US Corn planting was 14% complete (12% expected) vs. 42% last year and vs. 33% of the five-year average. Despite the big 7 percentual points weekly jump the delay is still sizable. By the end of the week the weather forecast pointed to favorable planting conditions which triggered further selling pressing Corn 3% lower in Chicago.
The stronger dollar and the rate increase by the Fed was also negative for prices.
In the Black Sea region, spring planting in Ukraine is making good progress with 50% of the area now planted making a weekly advance of 19 percentual points. The projected area is 14,2 mill ha vs. 16,9 planted last year which represents a loss of area of 15%. This is less than three weeks ago when they were projecting a 22% loss in area. It looks like the outlook for planting might be improving. Corn planting is 36,1% complete of the planting area in 2021 vs. 44 5% last year. The Ag Ministry said some 30% of the planting area may have mines in it. They also said fertilizers are difficult to find. At least weather is being favorable.
In Brazi, safrinha corn condition continues to worry due to low soil moisture.
On the wheat front, if India was gaining market share in export markets offsetting part of Ukraine’s lack of exports, a heat wave has raised concerns of lower production and the rumor is that the government will ban wheat exports.
Extreme heat in India will have a negative impact on the crop and the government has already cut their forecast by 6 mill ton to 105 mill ton but has also said they will not ban exports. But local analysts think the Wheat crop will be sub 100 mill ton and the government will step in controlling exports.
Wheat prices were further boosted by good US net sales and export data.
US Wheat conditions were unchanged at 27% good to excellent vs.48% last year. France Wheat conditions worsened to 89% good to excellent vs. 91% last week and vs. 79% last year.
We continue to be in a weather market, more sensible this year due to the supply constrains in the Black Sea which is holding 25 mill ton of grains that cannot be exported. The US, Brazil and India are vital suppliers this year and all are suffering from dry weather. Rains are expected in the US Wheat areas this week which will be beneficial to improve Wheat condition, and are also low enough to increase soil moisture and allow farmers to make big progress in Corn planting. In Europe the forecast is for dry weather and high temperatures, which will probably worsen Wheat condition in Germany and France.
And then we have the May WASDE this week Thursday with the big doubt of how many Corn acres will they project.
Expect volatility this week, maybe some downside risk if there is good planting progress in US corn, but the high price environment will remain.
