“The outlook for the corn market continues to be one featuring choppy, sideways trading for old-crop futures and a slight trend higher for new-crop,” the U.S. Grains Council (USGC) said in its Market Perspectives dated April 19. “Corn stocks are ample, which is dampening upward potential in old-crop prices, as are trade concerns, while the decrease in corn planted area could lift new-crop futures later in the year.”
The Grains Council noted that the U.S. Department of Agriculture (USDA) had put corn plantings slightly behind last year’s progress.
“The crop isn’t late yet, but its progress warrants watching,” the USGC said. It also reported that corn export bookings (sales plus exports) were within 2% of last year’s volume.
“YTD corn exports are still down, which is holding bearish sentiment over the market,” the USGC said.
Barley exports were up 70% on a year-to-date basis.
The International Grains Council (IGC) said in its Grain Market Report for March that its corn sub-index rose for the fifth month in a row, to 8% up from the previous month and 16% up from a year earlier.
“Prices were lifted by uncertainties about South American outturns as well as firm export demand and tight logistics at some origins,” the IGC said. Nearby U.S. May futures were up “fractionally” on the month.
“Values climbed to a seven-month peak in early March on an improved demand outlook amid the likelihood of softer competition from South American exporters,” the IGC explained. “Futures mostly declined thereafter as funds reduced heavy long positions, pressured by losses in other markets and better Argentine weather.”
Logistical constraints pushed up Gulf Premiums while Up River prices in Argentina rose by $9 from a month earlier.
“After initially strengthening on a diminishing outlook for production and good interest from North African buyers, the market succumbed to favorable rains for the crop as well as early harvest pressure,” the IGC said.
The IGC’s barley sub-index rose by 2% on the month and 30% on the year on “continued strong buying, including by China, Iran and Saudi Arabia, and tightening nearby supplies.”
Feed barley firmed in the E.U.
“There was modest support from a period of freezing weather for 2018-19 crops and ideas that wet weather could hamper spring seeding in some areas and potentially result in a switch to alternatives, including corn,” the IGC said.
Australian prices weakened, “despite good buying interest from China,” the IGC said, noting that “pressure stemmed from talk of increased area for the 2018-19 harvest, seen likely to be encouraged by solid export interest and attractive prices relative to other crops, including canola and pulses.”
For sorghum, the IGC reported a fall in U.S. export prices by $14 on the month, to $191 fob Gulf.
“While corn futures (May) were virtually steady, declines stemmed from softening basis levels, which receded on slow export demand,” the IGC said. “The domestic market in Argentina had a firm tone as the outlook for the crop continued to be affected by unfavorable weather. However, amid weakness in the local currency, Up River export quotations were little changed.”
Heavy fund selling triggered a fall of 11% in U.S. nearby May oats futures, the IGC reported.
“Against the backdrop of lower prices, grower sales were light in Canada, while inland transportation delays also impeded activity,” the IGC said. “Values in Australia firmed on good export demand and concerns about dryness ahead of planting.”
The USDA’s Economic Research Service forecast world coarse grains use in 2017-18 down by 6.2 million tonnes to 1.354 billion.
“Several changes reflecting production revisions, shifts in feeding among grains, the macroeconomic situation, and multiple trade changes across corn-importing and exporting countries motivated this month’s revisions,” the USDA said in its Feed Outlook report. “In some countries, relative prices favor wheat over corn for feeding, and increased wheat feeding is limiting the use of coarse grains.”
It gave the E.U. as an example. Forecast feed use of corn is down 700,000 tonnes, while feed use of wheat is set to rise by 1.5 million tonnes. The USDA figures do contrast with IGC forecasts, which have world coarse grains usage rising from 1.344 billion tonnes in 2016-17, to 1.368 billion in 2017-18 and then to 1.389 billion in 2018-19, with feed and industrial uses the biggest drivers of growth.