- Dry weather in US pulls Chicago corn higher.
- US corn planting faster than normal.
- Black sea grain corridor extension will ease vessel queue.
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 6,58 USD/bu.
Rally in Chicago and EU Wheat, while EU Corn had a negative week. Dry weather in the US pulled the market higher.
Chicago Corn had a boost last week with stronger than expected export inspections last Monday and then followed by dry weather expected and both things triggering a short covering rally. Chicago Corn closed the week just below 6 USD/bu but making at high of 6,066 USD/bu last Friday.
US exports inspections were +13% week on week much higher than expected.
The dry weather that has allowed a quick planting pace has now resulted in some areas being too dry thus risking the very high yield forecast by the USDA which we have been saying is the biggest challenge for the new crop.
The May EU MARS bulletin showed nothing new: south of Europe remains suffering from very dry conditions with Wheat yields 22% lower year on year and 38% lower than the five year average. The rest of Europe has not really suffered with all the losses coming from southern countries contributing to overall Wheat yields expected to be +4% yoy and the five year average. Corn area in France is expected to be -7,6% yoy and -6% in Italy but yields are expected to be +2% yoy. There are excess rains in the north which could result in pest and disease risks.
US Corn planting made another big weekly progress and is now 81% planted vs. 69% last year and vs. 75% of the five year average. This continues to favor crop development with 52% of Corn already having emerged vs. 35% of last year and 45% of the five year average.
In Brazil, the first Corn crop is 77,2% harvested vs. 83,7% last year, and safrinha Corn is 0,4% harvested. The government has declared a 180 day animal health state of emergency after five cases of avian flu have been reported since late March. The flu has been found in wild birds, but the authorities are concerned it could infect commercial farms.
In Russia, Corn planting is 76% complete and in France is 95% complete.
In the Wheat front, prices had a much milder rally than Corn mostly on the back of prices in the Black Sea falling after the deal for the grain corridor was extended. Although the reality is that the extension of the deal will simple free up the queue of vessels that are waiting instead of triggering new deals which are almost absent.
US Wheat condition improved by 2 pts and was 31% good or excellent vs. 28% last year. French Wheat condition were flat at 93% good or excellent but persistent dry weather in the south could result in conditions worsening.
In the weather front, US is expected to receive some rains in the Great Plains area but the Corn Belt is expected to remain dry which is good again for planting progress but it starts to threaten yield. Europe is expected to remain dry in the south and east, while north western Europe is expected to receive ample rains. Brazil is expected to receive good rains this week which should be positive for crop development and delay a bit harvesting operations.
The USDA is now undertaking their production and stock survey on farmers for the June 30 acreage and stock report. We think there could be some surprise here, not to acreage but to quarterly stocks as high Corn basis paid across the US kind of suggest availability is very tight.
The focus now turns only to weather and mostly US weather as the very ambitious Corn the USDA has projected needs perfect conditions to materialize as we have been saying for some time now. Last week’s short covering rally may result in a negative week and besides US weather, speculation around the June 30 stock number may give some support to the market. Also the June WASDE may give some clarity.
Rally in Chicago and EU Wheat, while EU Corn had a negative week. Dry weather in the US pulled the market higher. The focus now turns only to weather and mostly US weather as the very ambitious Corn the USDA has projected needs perfect conditions to materialize as we have been saying for some time now. Last week’s short covering rally may result in a negative week and besides US weather, speculation around the June 30 stock number may give some support to the market. Also the June WASDE may give some clarity. 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 6,58 USD/bu.