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Insight Focus
Corn trades sideways, wheat follows lower. Argentina’s tax reversal and rising Russian wheat output pressured markets, while dry US weather may speed harvest after earlier rains slowed progress. In the short term this supports prices, but longer term corn faces downside risk as harvest advances, while wheat looks flat to slightly positive.
There are no changes to our estimate for Chicago corn to average USD 4.18/bushel during the 25/26 (September/August) crop year. The average price since September 1 is running at USD 4.15/bushel.
Last week, corn traded sideways with small weekly losses in Chicago and somewhat larger losses in Euronext. Wheat mirrored corn. Argentina removed and then reinstated export taxes. Russian wheat production increased again.
Argentina Export Tax Reversal Weighs on Corn
Corn in Chicago traded very much sideways last week, with the low of the week on Monday and a mild recovery through the end of the week, resulting in small weekly losses that were somewhat larger in Euronext.
The fall in the market last Monday was triggered by Argentina eliminating export taxes on all grains to incentivise exports, as the country needs dollars. This triggered strong physical selling during the week and would have continued to increase corn and soybean exports out of Argentina. But by the end of the week, export taxes were reinstated and the selling stopped.
In the EU, the September MARS bulletin reported that southeastern Europe will have lower yields due to a very hot and dry summer. They are forecasting EU corn yields of 6.88 tonne/ha, down from 6.93 in their August bulletin and the five-year average of 7.1 tonne/ha.
US corn condition was 66% good or excellent, down one point week-on-week and versus 65% last year. US corn harvesting is 11% completed versus 13% last year and the five-year average of 11%. French corn condition was 62% good or excellent, unchanged week-on-week and versus 79% last year. Harvesting is 14% complete versus 1% last year and the five-year average of 13%. Corn harvesting in Ukraine is 5% complete. Corn harvesting in Russia is 11.4% complete.
US Wheat Recovers but Ends Week Lower
On the wheat side, US wheat opened very negative last Monday, also pressured by the Argentinian news, but it recovered through the week mostly on strong export sales in the US, though still closing the week negative.
IKAR in Russia revised their wheat production estimate upward to 87.5 million tonnes, up by 500 thousand tonnes from their previous estimate and versus 82.4 million tonnes last year.
US spring wheat is 96% harvested versus 95% last year and the five-year average of 96%. US winter wheat is 20% planted versus 23% last year and the five-year average of 23%. Russian wheat is 88.4% harvested. Winter wheat planting in Russia is 45.7% complete. Ukrainian wheat is 14.1% planted.
Dry Midwest Could Speed Up US Corn Harvest
On the weather front, the US Midwest is expected to be warm again but dry. Brazil’s Center-South had heavy rains last week, and rains are expected to continue at least through the middle of this week. Argentina is also expected to be rainy. In Europe, the northwest is expected to be mostly dry, while more rains are expected in the Black Sea region.
The dry weather in the US Corn Belt will probably accelerate harvesting, but this week’s progress will reflect the numbers of the previous week, which was rainy and may have slowed harvesting. This could be supportive in the very short term. Wheat should stop falling as harvest pressure will disappear with the northern hemisphere crop basically harvested. Longer term, we should see some downside risk in corn as the harvest advances, while wheat should remain flat to positive.
