Several Factors Support Corn Advance
Front-month futures have reached new highs above $6.00 and are at the highest levels since June 2013.
New crop December has also continued its rally to new highs, extending above the $5.00 level.
Drier forecasts in Brazil are supportive; DERAL reported Parana crop conditions fell to 76% good to excellent from 92% last week.
US cold snaps will probably hold up planting progress as temperatures across the Midwest are expected to be below normal into next week.
Higher energy prices and general commodity buying have increased fears of a surge in inflation.
The US Dollar has fallen back from its recent highs, which helps to encourage higher exports.
There are increased concerns over conflict in the Black Sea region as Russia warns about US intervention in the area.
FBN’s Take On What It Means: Weather in Brazil affecting the safrinha crop and in the US as planting is just getting started are likely to be the main drivers of corn prices. Other factors in alignment clear the way for prices to move higher. There is likely to be some resistance around the $6.00 level, but FBN expects values to be well supported into the growing season.
Strategie Grains Updates Grain Outlook
The agency forecast wheat production at 129.6 million tonnes.
That would be up 10.2 million from last year’s harvest, but shy of the 2019 harvest at 131 million tonnes.
Durum production is forecast at 8.2 million tonnes, up 900,000 tonnes from last year and up from 7.5 million harvested in 2019.
Barley harvest is seen at 54 million tonnes, down 1.5 million versus the 2020 harvest.
Corn production is forecast at 65.1 million tonnes, which would be up 2.5 million tonnes from last year’s crop.
The agency upped its wheat export forecast for the 2020/21 crop year to 25.4 million tonnes but does not anticipate a big increase in exports for 2021/22 on strong competition.
FBN’s Take On What It Means: The big boost in wheat production is not surprising; the rise in area for wheat took some of the production out of barley but overall, the trade bloc raised planted area versus a year ago. The bigger wheat production outlook is likely to be a trend for most exporters and will keep competition strong.
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