Corn prices finished the week with losses of around 3%, despite a 1% rally Friday. Argentina’s 2021/22 corn production is expected 6% higher than the prior estimate from a week ago. French corn conditions continue to erode lower after another week of excessively hot, dry weather. Ukraine’s 2022/23 grain exports are down almost 52% from a year ago. The bulk of exports since the beginning of July is comprised of corn sales totaling 76.4 million bushels. The price direction will depend on how much wheat and corn actually comes out of Ukraine in the coming weeks.
The June 30 Acreage report showed corn again the largest crop produced in America in 2022. USDA raised 2022 acreage expectations for corn by 431,000 acres from the March 31 report. Much of the pullback in corn futures has been taking pressure off from the speculative surge on record corn export volumes and higher unit values.
Longer term corn prices remain underpinned by possible U.S. planting delays and Ukraine grain unavailable for export.
Corn Futures Highlights
- September futures added 7.25 cents to $6.27,
- December futures up 7.5 cents to $6.2325.
- Corn basis bids improved 5 cents at an Ohio elevator and firmed 1 to 3 cents at two interior river terminals while holding steady elsewhere across the central U.S. on Friday.
- USDA reported the week’s corn oil prices were UNCH to 5c/lb higher wk/wk from 68 to 78 cents regionally.
- DDGS at the plant ranged from $190 to $265/ton regionally for the week that ended 8/19.
- Preliminary volume estimates were for 151,284 contracts, spilling moderately below Thursday’s final count of 211,163.
Corn Technical Outlook
Corn recovered from its freefall rejected at the 4/8 and bottom of the weekly cloud. The Corn rally had topped out at the highest since 2012 in Chicago at +1/8 and corrected with impulse back to break the Tenkan which it swiftly did a spit of a spit after bouncing off 720, which also the price successfully retested the high from April 2021. From here we saw Tenkan fail again, and empowered selling smashed through previous high, Kijun and 7/8 confluence. The 50wma gave no support with the cloud and 6/8 slowing the selling down. All these levels are now resistance.
WAOB Corn Stocks
The WAOB also took the world ending stocks number to 306.68 MMT, a 6.22 MMT reduction. That was led by the US and EU production cuts, with the latter down 8 MMT to 60 MMT. Ukrainian production was raised 5 MMT to 30 with exports up 3.5 MMT.
USDA August WASDE Report
USDA offered a first survey-based look at its 2022 corn yield forecasts in today’s WASDE report, dropping its estimates by 1.6 bushels per acre to 175.4 bpa. That was a bit lower than the average trade guess of 175.9 bpa. Because of the lower per-acre yields, USDA also lowered its corn production forecast by 146 million bushels to 14.4 billion bushels.
On the demand side, USDA lowered its estimates for 2022/23 corn use by 45 million bushels to 14.5 million bushels. The agency also lowered feed and residual use by 25 million bushels. Exports for the 2022/23 marketing year are expected to come in at 2.4 billion bushels (down 25 million bushels for July. With supply falling more than use, ending stocks fell 82 million bushels to 1.4 billion.
USDA also raised their old crop carryout in the monthly report by 20 mbu to 1.53 bbu. That increase came via a cut to the FSI use. The larger stocks mixed with the production reduction and a larger export forecast took new crop stocks to 1.388 bbu, a 82 mbu drop from the prior report.
U.S. EPA Blending Targets
The EPA released blending targets after the market close last Month. Biofuel blending targets for 2022 are forecast at 20.63 billion gallons, below the proposed volume. Retroactive adjustments for 2021 blending were above market expectations while 2020 volumes went unchanged.
The EPA added a 250-million-gallon supplemental standard to the 2022 blend mandates. It also denied 69 petitions for biofuel blending exemptions from refineries but will allow small refineries extra time to fulfill 2020 blending mandates.
France is Europe’s top grain producer.
French corn conditions continue to erode lower after another week of excessively hot, dry weather. French farm office FranceAgriMer reported today that only 50% of this season’s crop is now rated in good-to-excellent condition through August 15, falling another three points lower from a week ago. Ratings have tumbled more than 30 points lower in recent weeks and is far below year-ago totals of 91%.
Ukraine Corn Plantings
Ukraine’s 2022/23 grain exports are down almost 52% from a year ago, according to the country’s agriculture ministry. The bulk of exports since the beginning of July is comprised of corn sales totaling 76.4 million bushels. Wheat exports totaled 28.8 million bushels over the same period, with barley exports reaching 11.8 million bushels.
With exports from Ukraine severely limited at present, the EU may need to seek corn from further afield. And tight European supply could drive corn prices up and help wheat compete with corn for use in animal feed.
Ukraine’s spring plantings are now 98% complete and will drop 25% from a year ago due to the ongoing Russian invasion, per the country’s agriculture ministry. That includes 10.304 million acres of corn, 2.292 million acres of spring barley and 466,000 acres of spring wheat.
Argentina is the world’s No. 2 corn exporter and is a top seller of other commodities including soybeans and soymeal.
Argentina’s 2021/22 corn production is expected to reach 2.047 billion bushels, according to the latest estimates from the Buenos Aires Grains Exchange, climbing 6% higher than the group’s prior estimate from a week ago, due to better-than-expected yields in the Chaco and Salta provinces, along with an upward revision to planted acres. Harvest is around 98% complete.
An ongoing protest by federal revenue service auditors in Brazil has caused delays to payments for recent corn exports. “The scenario is shaping up to be much worse [than it has been],” according to Sergio Mendes, director general of Anec. The auditors have made several demands that include hiring more staff and receiving raises and performance-based bonuses.
USA Corn Exports
The USDA Exports for the 2022/23 marketing year are expected to come in at 2.4 billion bushels (down 25 million bushels for July.
South Korea Imports
South Korean importers purchased 2.4 million bushels of food-grade corn from optional origins in a deal that closed earlier this week. The grain is for arrival around November 10.
Effect of Higher Input Costs on Farmers
A recent report by the Agricultural and Food Policy Center (AFPC) at Texas A&M University shows higher input prices are having a larger impact on farmers than originally thought.
- Net cash farm income on the representative feed grain and oilseed farms is projected to decline by an average of $534,000 from 2021 to 2022 across the 25-feed grain and oilseed farms.
- Representative wheat farms face an average reduction in net cash farm income of $399,000.
- Representative cotton farms face an average reduction in net cash farm income of $716,000.
- Rice farms face the largest reduction in net cash farm income per farm at $880,000 and a per acre reduction of $442.
Compiled by Joe Outlaw, Ph.D., and Bart Fischer, Ph.D., co-directors of the AFPC.
COT on Commodities
- The CFTC Commitment of Traders report showed spec funds increasing their new longs during the week that ended 8/16.
- That left the group 11,778 contracts more net long at 153,840 contracts – a 6 week high.
- Commercial corn traders reduced long hedges and added new shorts for a 9,978 contract larger net short of 383,520 contracts.
Commodity Round Up
- The Bloomberg Commodities Index declined 0.7% (up 23.3% y-t-d).
- Spot Gold dropped 3.1% to $1,747 (down 4.5%).
- Silver sank 8.5% to $19.05 (down 18.3%).
- WTI crude declined $1.32 to $90.77 (up 21%).
- Gasoline dipped 0.9% (up 35%)
- Natural Gas jumped 6.5% to $9.34 (up 150%).
- Copper was little changed (down 18%).
- Wheat dropped 6.3% (unchanged),
- Corn fell 3.0% (up 5%).
- Bitcoin sank $2,880, or 11.9%, this week to $21,280 (down 54%).
From The TradersCommunity Research Desk