LONDON, ENGLAND – Maize (corn) prices fell in the first weeks of May, pressurized in particular by supply from South America. Barley, however, was pushed higher by concerns over supply prospect, with added impetus from a strong wheat market.
In its Market Perspectives report of May 19, the US Grains Council (USGC) reported a 0.3% rise in July maize futures that week, “as weak macroeconomic markets again pressured futures on Wednesday, despite a firm fundamental outlook.”
“Production issues are increasing across multiple parts of the globe and markets are entering demand rationing mode,” the USGC said.
The USGC noted that the 2022 planting season has had its slowest start since 2013.
“The late planting increases the odds that some farmers will not seed fields and opt for Prevented Planting acreage crop insurance,” the USGC said. “The futures market rally, however, offers a strong incentive to plant fields even past the optimal planting window.”
It also said that “the delayed planting has another likely impact that the crop in the Northern Plains could enter pollination during the peak heat and dry weather season of late July.”
The USGC also cited analysts forecast of a 5 million to 10 million-tonne reduction in Brazilian production with the safrinha crop facing, at the time, “another week of dry weather, except for scattered showers in southern Brazil,” while there was also a risk of frost.
“Moreover, in Europe, hot weather and growing drought is negatively impacting the European corn and barley crops, particularly in France,” the USGC said.
In its May 19 Grain Market Report, the International Grains Council (IGC) said its index for maize prices had fallen by 7% over the previous month but was still up by 13% from last year. The market was “pressured by seasonal factors in South America and spillover from non-grain markets,” the IGC said.
US futures were down by a net 4% on the month.
“While global supply concerns offered occasional price support, gains proved transient amid bearish technical features and declines in financial, equity and crude oil markets,” the IGC said. “New crop (December) futures touched fresh contract highs on USDA’s smaller-than-expected crop forecast and concerns about planting delays, before turning lower again more recently, finishing 1% down m/m.”
Argentina’s harvest progress was slow, but even so, fob values fell on “mostly adequate spot supplies and as exporters looked to attract fresh demand.”
In Brazil, spot quotations were seasonally scarce, the IGC said.
Barley, in contrast, rose by 4% from the previous month, to reach a new record high, “underscored by mounting worries about world grain supply prospects, as well as spillover from surging wheat prices,” the IGC said. “However, amid limited cash market activity, prices at most origins were reportedly highly nominal.”
Cash prices in the EU (France) were especially ill-defined, but assessed higher month-over-month, the IGC said, adding that the market was underpinned by slow producer selling, strength in wheat markets and mounting concerns about dryness across northern Europe.
Argentina’s export prices were up “amid tightening old crop supplies and reluctant forward selling,” while Australian quotations were “buoyed by strength in other markets.”
Wet weather reportedly affected already difficult port logistics in some areas, the IGC said.
Sorghum, the IGC said, came under slight pressure from weak CME maize, but Up River values in Argentina rose on firmer export premiums.
“In Australia, domestic values were stronger on wet-weather harvest delays and concerns about crop quality,” the IGC said. “However, tied to currency movements, fob quotations were a little softer.”
There was a month-on-month fall in US oats futures.
“Pressure initially stemmed from improving moisture conditions in the Canadian Prairies, before rebounding more recently on spillover from solid gains in wheat,” it said.