corn harvest
Corn fundamentals are bearish and prices neutral after a December USDA report showed no major changes. Corn is still in a long-term downtrend despite an increase in likely U.S. ethanol use as China’s sorghum imports drive a switch in raw material.

In its Market Perspectives report, published Dec. 14, the U.S. Grains Council (USCG) described corn prices as “on the defensive after a neutral December WASDE report,” referring to the World Agricultural Supply and Demand Estimates report. The WASDE report showed no major changes to the U.S. corn balance sheet and “except for dry weather in Argentina, all other fundamentals remain bearish.”

“Some technical indicators and recent fund activity may give way to a mild rally, but the long-term trend for corn is still down,” the USGC said.

The USGC also cited a Reuters report that Argentina’s corn plantings were on their slowest pace ever, based on data going back to 1995, with 62% of the country’s crop having been sown so far, compared with 70% at the same point the previous year and a 5-year average of 75%.

“The slow planting is the result of La Niña-induced dry weather, which has kept farmers out of the field,” the USGC said. “So far, the weather and consequent planting delays have not worried the global markets, but a continuation of this trend could spark a short-covering rally.”

Global competition for corn buyers is one reason U.S. corn exports remain below last year’s volumes, the USGC said. Year-to-date exports are 18% of the USDA’s forecast, compared with an average of 25% at this point in the year.

“The slow export pace is a key factor keeping corn prices in their current bearish state,” the USGC said.

One feature of the coarse grains market commented on by the USGC is that the USDA has raised its figure for U.S. sorghum exports to China by 50 million bushels (1.27 million tonnes) on the basis of faster-than-expected shipments to that country and at the same time added 1.27 million tonnes to the expected U.S. consumption of corn for ethanol production.

The International Grains Council (IGC) reported that corn export prices around the world firmed in November. Its GOI corn sub-Index rose by 2% month on month.

“Values in South America rose on slow farmer selling and occasionally difficult weather, while values in the U.S. ticked higher, drawing light support from stronger cash markets,” the IGC said. “U.S. futures dropped to fresh contracts lows in mid-November, pressured by bearish fundamentals and news of a larger-than-expected upgrade to the official yield estimate. With non-commercial funds holding a record large net short position, the market bounced later in the month, as a pickup in exports sparked speculative buying.”

Gulf fob quotations were slightly up on the month at around $158, despite a net 2% fall in futures “as basis offers firmed on reluctant farmer selling and strong demand for low-moisture supplies.”

Trade in Argentina’s old crop is winding down and the IGC quoted Up River prices in Argentina up by $4 on the month at $154 fob.

“Gains were essentially tied to slow country movement, but with dryness concerns also slightly supportive,” the IGC said. “New crop offers were competitive, at around $156 fob (March). Domestic values in Brazil were underpinned by planting delays in central regions and talk of a potentially smaller safrinha outturn. Strong export demand added to the upside, lifting Paranagua fob prices by $5, to $161.”

The IGC put nominal Black Sea prices steady at around $163 fob.

“While light support stemmed from this year’s smaller harvests in Ukraine and Russia, gains were kept in check by sluggish overseas buying interest,” the agency said.

The IGC reported that its GOI barley sub-Index had “declined fractionally” on the month “in mostly quiet activity.”

“Saudi Arabia’s recently announced plans to substitute some barley purchases with alternatives continued to weigh on market sentiment,” the IGC said. “However, overall losses were contained by signs of better demand, including a fresh tender by Saudi Arabia for 720,000 tonnes as well as buying interest from other destinations.”

Malting barley values were supported by reports of disappointing harvest quality in Australia, the IGC said.

“The sustained stronger pace of exports helped to underpin prices in the E.U., with cumulative shipments moving ahead of last season by mid-month,” the IGC said. “Nevertheless, strong competition from other origins continued to temper exporter sentiment.”

The IGC quoted French feed barley export quotations down by $3 on the month at $183 fob (Rouen) and Black Sea prices up $4 at $192 fob, “underpinned by solid exports. Accumulated shipments by Russia are so far nearly double last season.”