Insight Focus
Grains fell after higher-than-expected US corn acreage. Quarterly stocks as of March 1 were within expectations. Weather uncertainty and input risks support a premium, with Chicago corn seen consolidating at or above USD 4.5/bushel absent a quick Iran resolution.
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Uncertainty Supports Corn Risk Premium
All grains were down in the week, with the prospective planting report surprising the market with more corn acres. Quarterly stocks as of March 1 were within expectations in the US.
The prospective planting report last week was somewhat a surprise, given the skyrocketing prices of fertilizer should have resulted in lower corn acres. In reality, the reduction is big year on year, as last crop saw 98.8 million acres planted and now the expectation is 95.3 million acres. However, the market was using the February USDA outlook of 94 million acres as the reference – hence the surprise.
Planting is normally decided before February, when the war in Iran started and caused the rally in fertilizers, and the first round of fertiliser is normally applied during the autumn. So, it is difficult to change the planting decision at this point. What we could see is less use of fertiliser and other inputs during the spring, and this could result in lower yields.
The April WASDE will be released this week, and it will be interesting to see if the USDA maintains the yield forecast or revises it lower. There is another acreage estimate by the USDA expected on June 30, and it will be interesting to see if the number of acres is maintained.
There is enough uncertainty in the market — including spring volatile weather — to provide some risk premium to the market. Only a quick resolution of the war in Iran can trigger a selloff, but otherwise we continue to expect corn in Chicago to consolidate at or above USD 4.5/bushel.
There are no changes to our estimate for Chicago corn to average USD 4.18/bushel during the 2025/26 (September/August) crop, with some upside bias to USD 4.25/bushel given possible lower production in the US. The average price since September 1 is running at USD 4.3/bushel.
Bearish Prospective Plantings Weigh on Corn
Corn in Chicago opened negative last Monday on expectations of higher corn acres, which were confirmed, and continued trading lower through the end of the week, closing the week negative.
We had the Prospective Plantings report from the USDA last Tuesday and the quarterly stocks report with the stock position as of March 1.
Regarding prospective plantings, and despite fears of lower corn acres in favour of less fertiliser-intensive soybeans, farmers not only maintained their plans but indicated higher acres than those published by the USDA in February’s Outlook Forum.
Corn acres came in at 95.3 million, compared to 94 million in the USDA February Outlook Forum and 94.5 million expected by the market. Soybean acres came in at 84.7 million, versus 85.5 million expected, while wheat acres came in at 43.8 million, compared to 44.7 million expected.
Source: USDA
Regarding quarterly stocks as of March 1, the Bloomberg survey showed 9.1 billion bushels of corn and came in at 9.02 billion bushels. Soybeans came in at 2.1 billion bushels versus the expected 2.09 billion bushels, and wheat stocks came in at 1.3 billion bushels, right at the level the market was expecting.
US corn planting has started and is 3% complete, compared to 2% last year. Summer corn harvesting in Brazil is 45.7% complete, versus 53.3% last year and the five-year average of 45.8%. Safrinha corn planting in Brazil is 95.5% complete, compared to 97.9% last year and in line with the five-year average. Corn harvesting in Argentina is 19% complete.
Wheat Soft on Corn Weakness
Wheat also had a negative week both in Chicago and Euronext, but with mild losses, and was just dragged down by corn.
US winter wheat is rated 35% good or excellent, compared to 48% last year. French wheat is 84% good or excellent, unchanged week on week and versus 74% last year, marking the fifth consecutive week with unchanged conditions. Ukrainian spring wheat is 28.2% planted, compared to 35.8% last year.
Warmer temperatures and irregular rains are expected in Central and Northwestern Europe this week, and the same in the Black Sea region. The US is expected to have very much needed colder and rainy weather. Brazil is expected to be rainy this week in the Centre South, and heavy rains are expected in Argentina.
