Corn Futures Steady as Harvest Season Winds Down

Corn prices corn prices down just 0.66% as harvest winds down and farmer selling slows.  The European Commission reduced their corn crop outlook by another 600k MT to 54.9 MMT to 25% lower yr/yr with imports 1 MMT higher to 22 MMT. The summer’s historic heat wave has crushed the crop from France to Ukraine. Mexico’s agriculture ministry has indicated that the country’s 2014 ban on genetically modified corn would not be amended. Mexico’s U.S. imports could be cut in half when that ban is enacted.

US Corn Field
Corn Crop

UPDATE: On Saturday a statement from the defense ministry read, “Russian suspends its participation in the implementation of the agreements on the export of agricultural products from Ukraine.”

Mexico Ban on Genetically Modified Corn

Mexico’s agriculture ministry has indicated that the country’s 2014 ban on genetically modified corn would not be amended. Because of that, Mexico’s U.S. imports could be cut in half when that ban is enacted. “There are many alternatives to importing non-GMO yellow corn from the United States,” asserted deputy agriculture minister Victor Suarez earlier this week.

Mexico currently imports around 670 million bushels of corn annually from the U.S.

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

  • Corn December 22 closed at 6.80-3/4, down 1-1/2 cents, lost 3-1/2 cents for the week
  • December of 2023 closed at 6.21, losing 0-3/4.
  • Corn basis bids firmed 8 cents at an Ohio elevator and tracked 3 cents lower at an Illinois ethanol plant while holding steady elsewhere across the central U.S. on Friday.
  • Preliminary volume estimates were for 160,242 contracts, sliding a bit below Thursday’s final count of 175,423.

Corn Technical Outlook

Corn replicated last week’s price action as it recovered from its freefall in June it has worked its way up spitting off Kijun at the 7/8 near the top of the weekly cloud after Tenkan and 50wma was recaptured last month. Earlier in the year Corn 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. Which is back where we are. The 50wma is now support with the cloud and 6/8 below. All these levels are now significant.

Corn Futures Weekly via KnovaWave

USDA Corn Stocks

USDA reported corn stocks were 1.377 bbu on September 1st,, well below the average trade estimate. That was up by 142m bushels from last year’s count and compares to the average trade guess of 1.495 bbu. Implied Q4 use to finish the 21/22 season was 2.97 bbu, compared to 2.877 bbu used in Q4 of 20/21.

USDA revised 21/22 production 41 mbu lower to 15.074 bbu. That was exclusively through WCB revisions, specifically with a 12.45 mbu cut in IA. MN was lowered by 7.84 mbu, WI by 7.2 mbu, and SD down by 5.48 mbu.

EPA Review on Atrazine

The Environmental Protection Agency is in the middle of a review of atrazine and recently extended its deadline for comments to October 7.

“For nearly 60 years, atrazine has been a reliable and proven herbicide for effective and efficient sustainable farming practices,” notes Farm Futures policy editor Jacqui Fatka. “However, the use of atrazine is at stake, a product included in more than 90 herbicide products across the U.S., and one that is utilized on 75% of U.S. sorghum acres.”

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.  

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.

USDA’s weekly Ethanol Report

  • USDA reported the cash price for ethanol was mainly 3 to 8 cents higher for the week from $2.37 to $2.50/gal regionally.
  • Corn oil was seen 1 to 5 cents higher from 74 to 78 cents/lb regionally.
  • DDGS prices were mostly lower from -$25 to +$10/ton, with sales from $205 to $245/ton regionally. 
  • DDGS cash prices were mostly $5 to $15/ton lower from $210 (IN) to $340 (MO) regionally.

Europe

The European Commission reduced their corn crop outlook by another 600k MT to 54.9 MMT citing the summer’s historic heat wave. That is now 25% lower yr/yr with imports 1 MMT higher to 22 MMT. France is 96% harvested as of 10/24, data from FranceAgriMer. That is up from 51% last year. Ukraine’s grain harvest reached 70% complete, with 4.5 MMT of corn specifically. 

BAGE reported 22% of the 22/23 Argentine corn crop was planted. 

A few weeks ago, Coceral made “significant downward revisions” in France, Germany, Italy, Hungary and Romania. If realized, this would be a 15-year low and 26% below 2021’s output of 2.764 billion bushels.

France

France is Europe’s top grain producer.

France’s 2022 corn harvest is running nearly a month (28 days) ahead of last year’s pace and production could fall to a three-decade low after suffering through months of overly hot, dry weather.

Harvest progress is at 92% through October 17, up from 83% the prior week and well ahead of 2021’s pace of 30%.

Germany

Germany’s agriculture ministry expects the country’s 2022 corn production to tumble 21.5% lower from year-ago totals to 137.8 million bushels after facing multiple heatwaves and historically severe drought. Yesterday, the European Commission lowered its forecast for 2022/23 EU corn production by nearly 10% to 2.335 billion bushels.

Ukraine Corn Plantings

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 2022 corn harvest is just underway, with the country’s agriculture ministry reporting a progress of 0.5% so far. Production expectations currently range between 984.2 million and 1.063 billion bushels. That would be a decline of as much as 41%, if realized. Exports so far during the 2022/23 marketing year have reached 162.7 million bushels.

Argentina Exports

Argentina is the world’s No. 2 corn exporter and is a top seller of other commodities including soybeans and soymeal.

Drought is creating problems in Argentina. Farmers are facing the worst drought conditions in nearly 30 years. Many farmers plan to delay plantings this season. The Buenos Aires Grains Exchange maintained their estimate for 7.5m HA of 22/23 corn area, with planting progress 6% finished. 

Brazil

Brazil’s CONAB estimates their 22/23 corn crop at 126.9 MMT, up from 112.8 MMT in 21/22. 

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 Korea purchased 2.4 million bushels of animal feed corn in a private deal on Friday after cancelling an international tender for a similar amount. The grain is likely sourced from South American or South Africa and is for shipment in November.

Taiwan Imports

Taiwan made no purchases in its international tender for 2.6 million bushels of animal feed corn that closed earlier this week. The country will likely issue a similar tender that closes next week.

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 weekly CFTC data release showed managed money corn traders added 14.3k new longs through the week. Along with their 4.2k new shorts, that grew their net long by 10k contracts to 264,347 as of 10/25.
  • Commercial corn hedgers added 11.6k new shorts and closed 9.5k existing longs for a 21k contract stronger net short of 476,353 contracts – the most since June. 

Commodity Round Up

Highlights

  • The Bloomberg Commodities Index increased 0.4% (up 12.7% y-t-d).
  • Spot Gold declined 0.8% to $1,645 (down 10.1%).
  • Silver dipped 0.8% to $19.23 (down 17.4%).
  • WTI crude rallied $2.85 to $87.90 (up 17%).
  • Gasoline surged 9.2% (up 30%),
  • Natural Gas gained 3.9% to $5.68 (up 52%).
  • Copper declined 1.3% (down 23%).
  • Wheat fell 2.5% (up 8%),
  • Corn slipped 0.5% (up 15%).
  • Bitcoin jumped 7.6% this week, or $1,450, to $20,620 (down 55.5%).

Source: TC, USDA, Farm Progress

From The TradersCommunity Research Desk