Porto Alegre, February 7, 2022 – Adjustments in cases of production losses situations are always very difficult to make, as plantations are still under development, and the numbers may change up or downward depending on crop stage and climate. For the last 15 days, it has rained better in Argentina, for example. Would it be a situation of recovery of crops or just a stoppage of losses? In the midst of all this, all kinds of numbers emerge, exacerbating losses or trying to contain the speculative profile. Therefore, part of the market ends up waiting for the data on Argentina from USDA and on Brazil from SAFRAS & Mercado. USDA will release its update on the 9th, and Safras & Mercado on the 11th.
The international corn market is tense but has not been able to get support to breach the barrier of USD 6.40/bushel. Some indicators continue to weigh on price formation:
– Oil above USD 90/barrel must introduce new demand components for US ethanol and consequently greater corn crush. USDA may raise demand in this segment on its report;
– China has been absent from US corn imports since June/21 and is only shipping the 14 mln tons already purchased for this season. Last week, it even canceled shipments of 380 thousand tons. Prices in China are not rising, and this offers a symptom of a well-supplied market and no pressure for imports. USDA may correct China’s import projection downward to 26 mln tons. This is a factor that can pressure corn;
– Wheat found support at USD 7.50/bushel and awaits the unfolding of the ‘Ukraine’ episode, which involves the Black Sea market and the world’s largest wheat exporter, Russia, as well as other commodities. Winter crops have progressed well, and wheat continues with a downward bias, without considering the Ukraine factor. Of course, it is a curve that can influence corn;
– Strong losses in the soybean production in South America, which could actually exceed 30 mln tons, are causing natural and direct effects on CBOT prices. If the rains do not continue in February and March in Argentina, the losses could be even greater. The point is that these much higher soybean prices are keeping this commodity very competitive to gain acres in the 2022 season in the United States. Input companies are starting to report this trend more clearly. The possibility of corn losing 2 to 3 mln acres in the 2022 crop for soybeans and spring wheat could define a 22/23 cycle of stocks still below 40 mln tons, even considering high productivity. The picture, if confirmed, would keep CBOT prices still above USD 5.50/bushel until 2023.
This combination of indicators is keeping the international market supported on the CBOT above USD 6.00/bushel. Pressure on the wheat market could lead to falling corn prices, a slightly better-than-expected Argentine crop, lower-than-expected cuts in the US acreage and export pace could slow down prices.
Agência SAFRAS Latam
Copyright 2022 – Grupo CMA