Prices Surge on Strong Cash Corn
July corn futures rose 3% over the last three sessions including a limit-up move on Friday.
The July contract increased nearly 20% in April and new-crop December corn was up 18%.
Speculators have actually reduced net long positions while commercials, who are naturally short hedged have been large net buyers.
The surge higher has forced end users without coverage to acquire supplies at higher and higher prices.
Total export commitments are already at 2,666 million bushels vs the USDA's 2,675 million forecast, which will likely be raised in future reports.
Sales for 2021/22 are at 106 million bushels compared to 107 million bushels for new crop at this time last year.
Corn usage for ethanol was 76 higher than last year's COVID low of the year, and is on pace to reach the USDA projection of 4,975 million bushels.
Feed mills are increasing the use of more relatively cheap wheat in livestock rations as corn grows too expensive.
FBN’s Take On What It Means: The trade continues to worry about production issues in Brazil and the tightness of world stocks getting even tighter. CONAB and USDA will issue updated forecasts next week. We expect prices will continue to be supported until there is more known about the severity of the losses or until prices reach a level high enough to limit demand.
Ukraine Prices on the Rise
Wheat export prices increased $14 per tonne, and feed wheat rose by $12 last week.
Corn bid export prices rose by $13 over the past week, while bid prices for Ukrainian-origin barley rose by $6.
Rapeseed export prices for the exporter’s 2021 crop are up about $100 over the past 20 days.
There are concerns about a weaker harvest in the United States, the European Union and Brazil.
The current government forecast is for the area to be down 10% versus last year at around one million hectares.
The government has projected total grain exports could decline to 45.7 million tonnes in 2020/21 from 57 million tonnes last year.
FBN’s Take On What It Means: The higher prices are not surprising given the global balance sheets outlook for the coming crop year. The EU crop again is expected to be short and supplies in the US and Ukraine will be exceptionally tight heading into the crop year. Expect US new-crop prices also to gain.
FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN BR and FBN Market Advisory (NFA ID: 0508695)
The risk of trading futures and options can be substantial and may not be suitable for all investors. Past performance is not necessarily indicative of future results.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to, persons residing in Australia and Canada.
