Insight Focus

• US corn plantings have begun.
• Brazilian corn and soy harvests remain on track.
• Black Sea grains corridor delays build.

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

Sell off in Grains mostly last Thursday on expectations the April WASDE this week will confirm ample supply.

The week started positive for grains on the back of the Oil rally, especially Soybeans pulled higher by the Vegoil complex, but it then came back to reality very quickly closing the week negative on the back of ample supply expected in the April WASDE to be published this week Tuesday.

The first crop progress and planting report was published in the US showing Corn is 2% planted, same progress than last year and the five year average.

In Brazil, the Soybean harvest is 74,5% complete vs. 81,2% last year. The second corn crop made another big weekly progress and is now 96,3% vs. 99,5% last year. The first Corn crop is 47,6% harvested.

Poland said they would stop imports from Ukraine as Polish farmers are claiming import taxes to be implemented again like before the war. This may influence Corn basis in Poland.

In the Wheat front, The MARS bulletin in Europe was constructive for the new Ukraine crop projecting 25,5 mill ton of Wheat which is just slightly below the 27 mill ton of the five year average production.

US Wheat condition is 28% good or excellent vs. a value of 36% that the market was expecting. This is vs. 30% last year.

In terms of trade flow, the grains corridor out of the Black Sea continues to be virtually blocked with vessel inspections going extremely slow and causing a big vessel line up (some 100 vessels) and waiting times of 20 days which is stopping new deals from being made. Not only that, but the expiry of the agreement is on May 31 as Russia had only accepted a 60 day extension while the other singing parties claimed 120 days. Nothing is secured after May.

In the weather front, warm and dry weather is expected in the US Midwest which should be positive for a quick start of Corn planting. In Brazil favorable conditions are expected which will be positive for Soybean and Corn harvesting as well as for safrinha Corn planting, but later in the week rains are expected. Europe is forecast to have dry weather in the East and the south.

We have the April WASDE this week with the market expecting lower Corn stocks. Argentinian production will probably be reduced and Brazil should see no changes or marginal.

This week could see some volatility depending on the April WASDE but we are not expecting any surprise and mostly a confirmation of a big increase in Corn production and no surprises for Wheat to be harvested in three months’ time. This should continue to put downside pressure on all grains during the next few months. Only the Black Sea corridor flow being disrupted would be supportive prices. Or very unfavorable weather which does not appear to be the case by now.

Sell off in Grains mostly last Thursday on expectation the April WASDE this week will confirm ample supply. This week could see some volatility depending on the April WASDE but we are not expecting any surprise and mostly a confirmation of a big increase in Corn production and no surprises for Wheat to be harvested in three months’ time. This should continue to put downside pressure on all grains during the next few months. Only the Black Sea corridor flow being disrupted would be supportive prices. Or very unfavorable weather which does not appear to be the case by now. No changes to our average price forecast for Chicago Corn for the 22/23 (Sep/Aug) crop in a range 6 to 6,5 USD/bu. The average price since Sep 1 is running at 6,7 USD/bu.