- Hot and dry weather in US shouldn’t affect the Corn being harvested.
- Chicago Corn average price remains unchanged, US Corn harvesting is 9% complete.
- Russian Wheat is 78.7% harvested and is heading for a 90 million tonnes harvest.
No changes to our Chicago Corn average price forecast for the 2022-2023 September / August crop in a range of USD 6 to 6.5 per bushel. The average price since 1 September is running at USD 6.2 per bushel.
Negative week for Wheat on harvest pressure and trade flow out of the Black Sea picking up. Corn traded sideways in Chicago and negative in Europe. Quarterly stocks report due this week in the US could surprise.
After the correction of the previous week once the September WASDE published higher ending stocks for the new US Corn crop, the market was supported as rains during last week must have delayed harvesting, but dry weather is forecast for this week.
The MARS bulleting from the European Commission for September lowered their Corn yield forecast to 7.26 tonnes per hectare or 3% vs. their previous forecast mostly reduced in some eastern countries. This was not enough to avoid Euronext from having a negative week.
Ukraine submitted a WTO complaint against Hungary, Poland and Slovakia for the import ban on Ukrainian imports they have maintained despite the EU not having extended it after 15 September. But by the end of the week Ukraine chose for a resolution outside the WTO although nothing has been agreed yet.
US Corn harvesting is 9% complete vs. 7% last year and the five-year average. Condition worsened 1 pt to 51% good or excellent vs. 52% last year. Corn area under drought increased by another 4 points and is now 54%. French Corn is 81% in good or excellent condition down one point week on week and vs. 43% last year. Harvesting is 6% complete very much delayed vs. last year’s 24%.
In Brazil, Safrinha Corn is 95.7% harvested vs. 98.8% last year. First Corn crop planting started and is now 0.2% complete. Argentina has started planting and is 5% done vs. 3% last year.
In the Wheat front, prices fell on renewed trade flow out of Ukraine and probably on harvest pressure too. A total of five commercial vessels have entered or are in the way to Ukrainian ports in the Black Sea to carry agricultural products and two of them were successfully loaded and have sailed. This is a sign the Black Sea trade flow continues to flow slowly but steady.
US spring Wheat is 93% harvested in par with last year. The area of US Wheat under drought improved 4 points to 47%. Winter Wheat is now 15% planted vs. 19% last year and above the 16% of the five year average. Russian Wheat is 78.7% harvested and is heading for a 90 million tonnes harvest vs. 85 million tonnes of the latest WASDE.
In the weather front, Brazil was hit by a heat wave last week and is expected to continue until mid this week which could cause some damage to the first Corn crop already planted but should speed up Safrinha harvesting. The US is also expected to have hot and dry weather but should not have a negative impact on Corn which is already being harvested. Europe is expected to be wet this week.
The big picture in Wheat is that we have some risk premium in the market, especially due to the war in Ukraine and if we continue to see that trade flow out of the Black Sea picks up, that premium should start to disappear. But first there must be confirmation those vessels already loaded are able to successfully exit the Black Sea and the others in the lineup too.
In Corn, we have this week the quarterly stock report by the USDA with stocks as of 1 September and we don’t rule out a surprise with the report showing lower stocks than expected. Spot basis remain unusually high for this time of the year and in areas where it should be negative. If the report shows lower stocks, we could see a short covering rally as net spec short is sizable at a three year high and leaves the market vulnerable for a rally. This is in the short term, but looking forward, the size of the new crop would justify a sub USD 4 per bushel market.
Negative week for Wheat on harvest pressure and trade flow out of the Black Sea picking up. Corn traded sideways in Chicago and negative in Europe. Quarterly stocks report due this week in the US could surprise with lower stocks than expected triggering a short covering rally given the net spec short is sizable. In the longer term, the size of the new crop would justify a sub USD 4 per bushel market. No changes to our average price forecast for Chicago Corn for the 2022-2023 September-August crop in a range USD 6 to 6.5 per bushel. The average price since 1 September is running at USD 6.2 per bushel.