Insight Focus
- The week was slightly positive for corn, while wheat fell across all geographies.
- Dry weather in Brazil has lifted corn prices.
- Increased Black Sea shipments hit wheat prices.
Last week began on strong footing after the market correction caused by the November WASDE report in the previous week. Corn rallied, following soybeans on the back of dry weather in Brazil and worries of a smaller crop. But by the second half of the week, the market had sold off again, pulled down by weak wheat fundamentals and the quick corn harvesting pace. Chicago corn ended the week with modest gains, while wheat fell more than 4% in Chicago and 2% on the Euronext.
US Corn Farmers May Need to Sell Soon
Farmers in the US continue to hold on to corn stocks as they are caught between higher input costs and a bumper crop, which is putting pressure on prices. But we think they will need to sell sooner or later. The risk should continue to be to the downside.
US corn was 88% harvested, down four percentage points on the same time last year and roughly in line with the five-year average of 86%. Drought conditions worsened three points and now 40% of the area is affected. Russian corn is 69% harvested, while Ukrainian corn is 79% harvested.
French corn is 97% harvested – only slightly behind last year and condition was stable at 80% good or excellent. In Brazil, the first corn crop is 76% planted, six percentage points ahead of last year. The summer corn crop is 45.8% planted, lower than the 53.9% recorded last year. In Argentina planting is 25.1% complete.
Higher Black Sea Supply Pressures Wheat
On the wheat front, European prices were strong following floods in France. As a result, planting pace has fully stopped and will not resume until end of November. The slower planting pace in the US and worsening conditions were supportive of prices too.
But by mid-week, the market sold off ample global supply, and Black Sea exports picked up. Ukraine published grain exports figures showing that 46.2 million tonnes of grains were exported in the year to October, which is 13% higher on the year, further pressuring prices.
After very hot weather in Brazil last week, rains arrived over the weekend and are forecast to continue until the middle of the week. Argentina is in a similar situation. The US continues to experience warm weather and Europe is expected to have drier weather this week after excessive rains last week in France. US export inspections were lower than expected at 7.4 million tonnes for the marketing year to date, down from almost 10 million tonnes in the previous marketing year.
US winter wheat is now 93% planted, just two percentage points behind last year and level with the five-year average. The crop condition fell three points to 47% good or excellent compared with 30% last year. About 44% of the wheat area is under drought conditions, up two points from last week.
Russian winter wheat plating is 92% complete, ahead of 87% last year. Planting in Ukraine is 91% complete. French wheat is 71% planted, 25 percentage points behind last year and below the five-year average of 89%. The condition also fell five points on the week to 86% good or excellent.
