Demand vs Weather Holds Corn In Check
China's new crop corn commitments from the US are already at 10.7 million tonnes of next season’s currently projected 26 million.
There are also reports China may have already booked 5 million tonnes of new crop corn from Ukraine.
Corn futures have fallen about 13% from a eight-year high following USDA’s report that stocks may not be as low as feared.
It has been reported China will continue to buy until they’ve booked close to 15 million tonnes of US new-crop corn.
Improved rainfall continues to be forecast for Brazil’s safrinha corn area this week, but the big question is whether or not the rain will be too late.
The forecast for the Midwest over the next two weeks is for normal to above normal rainfall accompanied by normal to above normal temperatures.
FBN’s Take On What It Means: China’s domestic corn prices are still near recent highs, indicating demand is much stronger than previously believed. China Likely wants to have coverage in place with Brazil’s crop getting smaller and the US crop facing risks for the growing season ahead. Currently, historic new-crop buying is offset by generally favorable US weather forecasts, which keeps prices supported to the downside, but also limited to the upside.
Russian Grain Crop Expected Lower
Russia’s Deputy Ag Minister reported this year’s wheat crop is forecast at 80.7 million tonnes compared to last year’s 85.9 million.
The projection is similar to other recent private forecasts, but is below USDA’s current forecast of 85 million tonnes.
The total 2021/22 grain crop was forecast at 127 million tones versus 133 million last year.
Total grain exports this season are projected up to 51 million tonnes from 48 million last year.
The new grain export duties taking effect on June 2 are reportedly $30/tonne duty on wheat, $40/tonne on barley and $50/tonne for corn.
The Russian government may also look to acquire 3 million tonnes of wheat as intervention stocks.
FBN’s Take On What It Means: Parts of Russia’s Central region remain too wet, and spring wheat areas are experiencing warm temperatures and dry conditions with no pattern change forecast. The Russian export market seems slowed by the uncertainty due to the floating export tax plan set to take effect, while the intervention wheat stocks are very low. At this point, production above 80 million tonnes should allow exports to rebound and compete with other origins and limit price gains.
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