Key US corn producing regions including Illinois, Iowa and Nebraska received much needed rain last week, said those analysts. There is up to 1.5 inches of rain due in parts of those regions at the end of this week which could help improve conditions.
The dip in Chicago corn futures was markedly more severe than that seen in Europe, noted a CRM Agri market review.
Beyond rainfall, another reason for US price fall was data showing that US farmers sowed much more corn this spring than had been thought, said the CRM Agri team. A fresh US Department of Agriculture (USDA) estimate on Friday pegged sowings at 94.1m acres. “That represents the largest corn area in a decade, and the third largest since World War II. It was also 2.1m acres more than suggested by a USDA poll of farmers in March, before sowings began.”
The USDA’s forecast for a record US corn yield of 11.4 tons per hectare appears optimistic given the crop’s poor start, as per official condition scores, they continued. “It is likely some yield potential is already lost even if the Midwest does turn wetter – an outcome which itself cannot be taken for granted.”
Furthermore, the US balance sheet entering 2023/24 looks like being tighter than had been thought. The USDA tallied domestic inventories, on Friday, as of June 1 as being 3.8Mt short of investors’ expectations, said those grain market experts.
Assessing wheat prospects, and the AHDB report outlined how US and European weather remain watchpoints over the coming weeks, likely keeping prices volatile.
“The last few weeks have seen minimal rainfall in northern Europe in particular, and as a result, cereal crop production prospects were revised down by the EU Commission last week. The EU-27 soft wheat production forecast for harvest 2023 now sits at 129.9 Mt. While this is down on the month, if realised, it would be up 2.5% on the year.”
The wheat price retreat is down largely to the fortunes of corn, a rival for demand in many uses, such as feed, as per the CRM Agri analysis.
Supply uncertainties remain, it added. “The rally in wheat futures has gone into reverse, driving most-traded contracts in Chicago below $6.50/Bu, in Paris below €230/t and in London below £200/t. For Q3, we maintain expectations that Chicago futures will average $6.95/Bu, Paris milling wheat €267/t, and UK feed wheat £210/t, although harvest pressure cannot be ruled out.”
The European barley outlook looks to be tightening due to adverse weather. Though ultimately barley price direction will still depend on the wider grains complex, said AHDB.
“The 2023 EU-27 barley harvest is currently pegged at 50.1 Mt, down 3.6% from the harvest 2022 estimate.”
The future of Black Sea grain exports is still in focus, however, with the expiration date for the UN-brokered grain export corridor fast approaching.
Last week, Russia said that they see no reason to extend the Black Sea initiative beyond July 17. However, yesterday the Financial Times reported that the EU is considering a proposal for the Russian Agricultural Bank to set up a subsidiary to reconnect to the global financial network. This would enable the bank to handle payments related to grain exports, facilitating the grain deal, commented the AHDB team.