Rising wheat prices support new crop corn prices

2021-08-03 12:07:17
Machine translation
Rising wheat prices support new crop corn prices

The corn market was supported by a rapid speculative increase in wheat prices, driven by lower forecasts for spring wheat production in the United States and Canada due to the heat wave. Forward prices for corn in Ukraine are also rising, although the weather contributes to the development of crops, and precipitation that will pass in the coming days will improve the prospects for the future harvest.

 

On the Chicago SWOT yesterday, December corn futures rose 2.6% to 2 220.1/ton, while October Black Sea corn futures rose на 1/ton to.255.25/ton.

 

Against the background of the heat, the development of corn crops in the United States is faster than usual. According to the NASS USDA report, 91% of crops have passed the silkiness stage, and 38% of crops are in the wax ripeness stage, compared to 86% and 33%, respectively, on average over 5 years. The number of corn crops in good or excellent condition for the week decreased by 2% to 62%, although last year it was 72%.

 

Dry and hot weather worsens the condition of crops in northwestern Colorado, Kansas and North Dakota, while in the eastern regions of the US corn belt, favorable weather improves crop prospects.

 

During the week, 1.384 million tons of corn were inspected in the United States for export purposes, which is the highest in the last 6 weeks, which was facilitated by an increase in supplies to China. In total, 62.81 million tons of corn were exported during the season, so it is unrealistic to reach the USDA forecast for 2020/21 mg of 72.4 million tons by September 1.

 

In June, 11.17 million tons of corn were processed for ethanol, compared with 11.4 million tons in May. Since the beginning of the season, 113.4 million tons of corn have been used for ethanol production, but to meet the USDA forecast, another 22.45 million tons of grain will need to be processed in July and August.

 

According to the agency Agrural, in Brazil, due to frosts and high humidity, Corn of the second crop was harvested by 49%, which is 12% lower than last year's pace. Compared to last year, the harvest forecast was reduced by 19 million tons to 51.6 million tons, which is 25 million tons lower than the original forecast.

 

The decline in the production of second-crop corn, which Brazil mainly exports, supports the prices of Ukrainian corn. Forward prices recovered to the level of 2 240/ton for deliveries to the port in October – November, but producers stopped sales in anticipation of further price increases, given the rise in the price of wheat for the week from 2 220/ton to.235-240/ton.

 

Traders are concerned about the situation in China, where outbreaks of coronavirus have resumed, and news about a slowdown in the economy and, as a result, oil demand, which has already led to a decline in oil prices, which will accelerate due to the decision of OPEC+ to increase production from August.    

 

In addition, experts of the European Commission in the July report increased the forecast of corn production by EU countries in 2021/22 MG by 2.2 million tons to 72.8 million tons (65.1 million tons in 2020/21 MG), which will lead to a reduction in corn imports to the EU.

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