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Jun 01, 2021

Markets Open Higher After Long Weekend

Mato Grosso government lowers corn production; IKAR raises Russia wheat forecast

Mato Grosso Government Lowers Corn Production

  • The state government report cut production 7.5% versus the previous forecast due to lower yields as planted area was held.

  • The report cited below-average rainfall for May with the northeast and southeast areas showing the largest yield declines.

  • Versus last year, production is forecast to be about 10% lower at 32 million tonnes as compared to 35.5 million cut in 2020 despite area being up nearly 5% versus a year ago.

  • For the upcoming soybean planting season, the local government forecast record areas.

  • Planted area is seen at 10.8 million hectares, which would be up 3.2% versus last year’s area.

  • Initial production forecasts are around 37 million tonnes, or up 3.4% from the recent harvest.

FBN’s Take On What It Means: The report is not a big surprise in that corn production for the state is lower and soybean area is expected to rise. For the US, the lower corn total is a plus. Recall China does not purchase corn from Brazil, but any lower total for the exporter is a plus for other countries that export. The record area expected for soybeans is not a surprise. But, we still have a long way to go before Brazil cuts its 2021 soybean crop.

FBN
FBN

IKAR Raises Russia Wheat Forecast

  • The agency boosted its wheat production forecast by 500,000 tonnes.

  • Now, the crop is seen at 79.5 million tonnes.

  • The agency cited improving weather for the crop in southern areas and a higher sowing area for spring wheat in the central areas.

  • We know the planted area for winter wheat was above the previous year but we still are not sure what the final spring wheat area could be.

  • SovEcon reported April wheat exports at 501,000 tonnes with May seen around 900,000 tonnes.

  • This is key as the totals are well below what would have normally shipped out during the period.

FBN’s Take On What It Means: We lean toward Russia’s wheat crop coming in larger than IKAR’s current projection. Plus with light export totals reported for April and May, Russia is set up to have large rollover stocks. That combined with even an average crop could result in a massive export program. This will compete with US HRW exports and sets the stage for a difficult US export year.

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Kevin McNew

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Magazine

Marketwatch: Dec, 03

cmdty National Corn Price Idx: ZCPAUS.CM

open: 5.6309
high: 5.6797
low: 5.6159
close: 5.6309

cmdty National Soybean Price Idx: ZSPAUS.CM

open: 11.9852
high: 12.1581
low: 11.9477
close: 12.111

cmdty National Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 8.119
high: 8.2535
low: 8.054
close: 8.2002

cmdty National Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.5939
high: 7.7096
low: 7.5239
close: 7.6525