Insight Focus

• USDA sees global corn stocks down just 1m tonnes this season.
• Argentina’s corn crop has been revised lower to 37m tonnes.
• This news was neutral for the corn futures market.

Forecast

No changes to our Chicago Corn average price forecast for the 22/23 (Sep/Aug) crop in a range of 6 to 6,5 USD/bu. The average price since Sep 1 is running at 6,7 USD/bu.

Market Commentary

Mixed week for grains with Chicago values up on the back of strong exports and European values down despite Russia threatening with not extending the Black Sea corridor. The April WASDE was a nonevent.

The April WASDE last Tuesday was somehow neutral to the market.

US Corn stocks where left unchanged at 1,342 bill bu with 10 mill bu of less imports offset by lower demand. World Corn stocks were down by 1 mill ton immaterial to the market and all coming from lower production: Argentina was revised lower by 3 mill ton to 37 mill ton, Russia was revised higher by 1,8 mill ton to 15,83 mill ton, and the EU was revised lower 1,3 mill ton to 52,97 mill ton.

Conab in Brazil increased their forecast for Corn production to 122,5 mill ton. In Argentina, BCR reduced again their Corn production forecast to 32 mill ton from 35 before. BAGE left their projection unchanged at 36 mill ton.

In Brazil, the Soybean harvest is 78,2% complete and the second Corn crop made another big weekly progress and is now 98,9% planted vs. 99,8% last year. The first Corn crop is 50,2% harvested.

US Corn is 3% planted ahead of 2% last year and the same progress of the five year average.

In the Wheat front, the April WASDE increased US ending stocks by 30 mill bu mostly coming from lower demand leaving production unchanged. World stocks were reduced marginally by 2 mill ton mostly all coming from higher demand. Production figures of the main producing countries were fine-tuned but basically unchanged.

US Wheat condition is 27% good or excellent down one percentual point in the week and vs. 32% last year.

Besides the WASDE and production stats, the focus turned to Russia which continued to tension the grains corridor out of the Black Sea which will expire in May. Apparently Russian officials are delaying operations with just 2-3 vessels being inspected per day and the queue is of some 100 vessels waiting. Russia also said the deal will not be extended if their interest are not met as they are asking not to be excluded from the SWIFT system to make bank transactions. We will have to wait and see.

In the weather front, dry weather is expected again in the US Wheat growing areas which could have a negative impact on Wheat condition but will probably accelerate Corn planting as the Corn belt is also expected to see warm and dry weather. Brazil is expected to receive some cold weather which will come with rainfall across the center south. Europe is expected to see warm weather and some rains in the north.

US Weather and Russian threats around the extension of the Black Sea corridor were responsible for the end of the week rally which was also responsible for the bulk of the weekly gains in Chicago. But Corn was further boosted by strong Chinese buying published by the USDA last Friday.

Weather is now one of the key factors during the coming 2-3 months impacting Wheat conditions and Corn planting, both in the northern hemisphere. The Black Sea export corridor is the other volatile element. Expect some volatility but overall downside risk on the back of higher supply looking forward.