Deja vu for corn and other grain futures this week as heavy selling continued. Corn prices on Friday were mixed after traders adjusted their positions ahead of the July 4 holiday weekend. July futures firmed 7 cents to reach $7.5075, while September futures dropped 9.25 cents to $6.1950 adjusting after USDA’s Thursday morning release of the June 30 Acreage report. The 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. 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. The USDA last week appeared to be optimistic about Ukraine however.
Corn Futures Highlights
- Corn dropped 9.9%, still up 2% ytd
- Futures prices ended Friday’s trading session with July futures firmed 7 cents to reach $7.5075, while September futures dropped 9.25 cents to $6.1950.
- Preliminary volume estimates were for 282,480 contracts, falling sharply below Thursday’s final count of 441,794.
- Corn basis bids were mostly steady across the central U.S. on Friday but did pick up 2 cents at an Illinois river terminal while eroding 5 to 15 cents lower at two Midwestern ethanol plants today.
Corn Technical Outlook
The Corn rally topped out at the highest since 2012 in Chicago at +1/8 and has 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.
Domestic Corn Stocks
Domestic ending stocks for 2021/22 increased to 1.485 billion bushels, and 2022/23 ending stocks also moved higher, reaching 1.400 billion bushels. Analysts expected to see a modest decline for both numbers. The season-average farm price for producers held steady, at $6.75 per bushel.
Planted acres and quarterly stocks updates from USDA
Next Thursday’s the USDA releases its planted acres and quarterly stocks updates. This is one of the agency’s most highly anticipated reports of the entire year. This year, with the delayed spring planting it will be interesting to see how the USDA has planted acres for corn.
Currently the U.S. planted acres for corn are pegged at 89.5 million acres, with harvested acres at 81.7 million acres (approximately 91.3% of the planted acre number). Yield has already been adjusted lower to 177 bpa.
Three scenarios via Naomi Blohm, senior market adviser with Stewart Peterson.
“Traditionally the price reaction on this report day can be dramatic; potentially leaving prices nearly limit up or limit down depending on the information received,” according to Naomi Blohm, senior market adviser with Stewart Peterson.
- Should corn planted acres come in slightly lower at 89 million acres, then ending stocks would be down to 1.321 versus the current 2022-23 estimate of 1.4 billion bushels.
- If planted acres come in slightly larger at 90.5 million acres, then ending stocks would be pegged at 1.565, and would then likely keep corn futures trading each and every weather forecasts throughout July to get a better handle on yield.
- Should planted acres come in at 91 million acres, then ending stocks would swell to 1.648 billion bushels, comfortably larger than 1.4 billion bushels estimated now.
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 farm office FranceAgriMer estimates that 83% of this season’s crop is rated in good-to-excellent condition through June 27, easing a point lower from a week ago.
European Union grain trade association Coceral slightly lowered its estimates for EU corn production this season to 2.598 billion bushels earlier in June. That would be a year-over-year decrease of 1.8%, if realized.
Ukraine Corn Plantings
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 is the world’s No. 2 corn exporter and is a top seller of other commodities including soybeans and soymeal.
Argentina ended a weeklong trucking strike that was initiated due to diesel shortages. That will go a long way in jumpstarting the country’s grain export pace. Truck volume to ports on Thursday increased 70% from a day earlier.
USA Corn Exports
Corn export shipments fell 26% below the prior four-week average to 45.2 million bushels. China, Mexico, Japan, Taiwan and Colombia were the top five destinations.
Earlier this month a USDA-ERS report showed U.S. corn exports in fiscal year 2022 are now forecasted to improve by $2.2 billion, reaching a new total of $19.1 billion “due to record volumes and higher unit values.
Total U.S. agricultural exports are expected to improve $7.5 billion to reach a record $191.0 billion.
South Korea Imports
South Korea purchased 2.7 million bushels of corn from optional origins in a private deal earlier today. The grain is for arrival in October.
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.
Commodity Round Up
- Bloomberg Commodities Index slumped 3.4% (up 18.1% y-t-d).
- Spot Gold declined 1.1% to $1,827 (down 1.2%).
- Silver dropped 6.2% to $19.85 (down 14.8%).
- WTI crude added 79 cents to $108.41 (up 44%).
- Gasoline dropped 5.6% (up 65%),
- Natural Gas sank 8.4% (up 53%).
- Copper fell 3.4% (down 19%).
- Wheat sank 10.2% (up 9%),
- Corn dropped 9.9% (up 2%).
- Bitcoin sank $1,700, or 8.0%, this week to $19,570 (down 58%).
From The TradersCommunity Research Desk