Insight Focus

• US corn now only 51% good/excellent vs 64% last year.
• US wheat harvest pace still slow.
• No news on an extension of the Black Sea Export Corridor.

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 6,53 USD/bu.

Market Commentary

Chicago recovered a bit last week with Corn and Wheat making gains and EU Corn having weekly losses accommodating to prices in Chicago. All eyes on the July WASDE this week.

The week started negative in Chicago still digesting the big acreage number published the previous Friday as well as the lower stock number as of June 30.

Then we had a good export inspection number and the mood started to shift to Corn yield worries given poor Corn condition which finally stabilized and improved one point after five weeks of declines. Corn condition is now 51% good or excellent vs. 64% last year. Corn area under drought is now lower too being 67% vs. 70% of the previous week.

In Europe, the EC lowered their Corn production forecast by 437k ton to 63,9 mill ton roughly unchanged from last year and 7% below the five-year average. Corn condition in France was 83% good or excellent.

In Brazil, Safrinha Corn is 20% harvested making another big weekly advance but still slower than the 28% progress of last year. First Corn harvest is complete.

In the Wheat front, the EC lowered their production forecast by 2,68 mill ton to 129,9 mill ton mostly due to lower yields in eastern Europe. Production would now be 2% lower year on year.

US winter Wheat is 37% harvested still slow vs. last year’s pace of 52%. Condition was unchanged at 40% good or excellent still much better than last year’s reading of 30%. Spring Wheat condition was 48% good or excellent vs. 66% last year. French Wheat condition was unchanged at 81% good or excellent vs. 64% last year, and is 10% harvested vs. 13% last year.

Russia has started harvesting Wheat which is now 1% complete.

There were no news last week around the extension of the Black Sea export corridor which expires next week July 18. The last piece of news is that Russia said they will not extend the agreement. And the only certainty is that vessel inspections continue to run very, very slow not allowing a decent pace of exports out of Ukraine.

In the weather front, rains are forecast again this week for the US Corn Belt, and is the third week in a row having favorable weather. Brazil is expected to have cold and rainy weather which could delay a bit safrinha harvesting pace but it will benefit the crop.

The US drought monitor showed some improvement last week in Corn area experiencing drought now being 67% vs. 70% the previous week.

We have the July WASDE this week with the big doubt being if the yield downgrade will be done now or if they will wait for the impact of July weather and publish it in the August WASDE. For us is clear there is no possibility to see 181,5 bpa so they could well opt for a mild downgrade in this week’s report and then another adjustment in August and/or September. Corn condition is the lowest since 2012 when yields plummeted by 16% vs. 2011. That year we had a much drier situation and we are not expecting this type of reduction in yields this year, but a reduction will come for sure.

Another potential change in the July WASDE is what they will do to old crop stocks given June 1 stocks were lower than expected.

A third week of rains in a row should be negative prices, but if the July WASDE shows a first downgrade for yields, the market should be supported.

Chicago recovered a bit last week with Corn and Wheat making gains and EU Corn having weekly losses accommodating to prices in Chicago. All eyes on the July WASDE this week. We have the July WASDE this week with the big doubt being if the yield downgrade will be done now or if they will wait for the impact of July weather and publish it in the August WASDE. A third week of rains in a row should be negative prices, but if the July WASDE shows a first downgrade for yields, thmarket should be supported. 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 6,52 USD/bu.