Corn prices rose Friday after the WASDE report cut its forecast for corn yields more than expected by analysts to 175.4 bushels per acre this year, lower than consensus 175.9 and 177 bpa in the previous forecast. USDA forecast higher corn yields than last year in Illinois, Minnesota and South Dakota, but below year-ago levels in Indiana, Missouri, Nebraska and Ohio. On Thursday, commodity funds were net buyers of all major grain contracts, including corn (+4,500). FranceAgriMer puts this year’s French crop at its worst condition since 2011.
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
- Sep 22 Corn closed at $6.39 3/4, up 10 1/2 cents,
- Nearby Cash was $6.97 3/8, up 6 5/8 cents,
- Dec 22 Corn closed at $6.42 1/4, up 14 1/2 cents,
- Mar 23 Corn closed at $6.49, up 14 1/2 cents,
- New Crop Cash was $6.08 1/2, up 14 3/4 cents,
- Corn basis bids were steady to weak across the central U.S. on Thursday after sliding 2 to 15 cents lower at seven Midwestern locations today.
- Preliminary volume estimates were for 357,220 contracts, trending well above Thursday’s final count of 248,310.
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
France is Europe’s top grain producer.
French farm office FranceAgriMer showed the country’s corn ratings are continuing their steep decline amid widespread hot, dry conditions. Just 53% of the crop is rated in good-to-excellent condition through August 8, versus 62% the prior week. That puts this year’s crop at its worst condition since 2011. Ratings have tumbled 30 points lower over the past month.
Ukraine Corn Plantings
Three ships loaded with nearly 2.3 million bushels of corn have been given the go-ahead to set sail from Ukrainian ports. The ships will move to Turkey before the grain heads to several final destinations.
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.
The Ukrainian Agribusiness Club estimates that the country’s total grain production will drop nearly 38% this season. That includes corn production sliding 39% lower to 1.012 billion bushels and wheat production dropping 44% to 661.4 million bushels. Ukraine is a significant exporter of both crops.
Argentina Exports
Argentina is the world’s No. 2 corn exporter and is a top seller of other commodities including soybeans and soymeal.
The BA Grain Exchange indicated the Argentine corn harvest moved ahead 11 points to 67%, trailing the 5-year average by 8 points. Production remains estimated at 49 MMT. This is 4 less than the USDA estimated.
Brazil
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 net long in corn futures and options by 12,141 contracts in the week ending 8/9.
- They took that net long position to 142,062 contracts as of Tuesday.
Commodity Round Up
Source: TC, USDA, Farm Progress
From The TradersCommunity Research Desk