Global feed grain market: slow progress in spring planting, international crude oil surged, corn prices rose

 

July 2022 corn futures on the Chicago Board of Trade (CBOT) closed at about $783.
75 a bush on Thursday, up 23 cents, or 3%, from a week ago
.
U.
S.
Gulf No.
2 yellow corn was quoted at $8.
9275 a bushel, up 16.
5 cents, or 1.
9 percent, from a week ago
.
June 2022 corn futures on the EURONEXT exchange settled at around €332.
75/tonne, up €10.
25 or 3.
2% from a week ago
.
The FOB offer price of Argentine corn in Shanghe was $311/ton, unchanged from a week ago
.
The September 2022 corn futures on the Dalian Commodity Exchange closed at around 2,959 yuan/ton, up 31 yuan or 1.
1% from a week ago
.

 

　　International crude oil futures closed higher this week, ending the losing streak of the past two weeks, as U.
S.
crude oil production estimates were raised on news that the European Union may ban imports of Russian crude oil in stages
.
The most actively traded West Texas Intermediate (WTI) May contract on the New York Mercantile Exchange (NYMEX) was at $106.
95 a barrel, up 8.
8% from a week ago, while the global benchmark Brent June crude futures closed at $111.
7 / barrel, up 8.
7% from a week ago
.

 

　　The ICE U.
S.
Dollar Index closed at 100.
315 on Thursday, up 0.
5% from a week earlier
.

 

　　Geopolitical tensions will lead to more volatility in the weather market this year

 

　　Chicago corn futures hit a new contract high this week
.
Unless Ukraine can reach a peace deal in late spring, U.
S.
and global corn stocks/use ratios will tighten further in 2022/23, which means this spring planting season will be more of a concern, with extreme volatility in the weather market.
exacerbated
.
Unless the weather in the Midwest is confirmed to be perfect, corn prices are still likely to challenge new contract highs further
.

 

　　The U.
S.
Department of Agriculture's second weekly crop progress report this year showed that as of April 10, U.
S.
corn planting was 2 percent complete, unchanged from last week, down from 4 percent a year earlier and the five-year average of 3 percent
.
Cold, rainy weather and muddy fields in some parts of the Midwest have stalled corn planting progress
.
The weather forecast indicates that it will remain cold and rainy for the next few days
.
The weather report released by the U.
S.
government agency on Friday showed that the weather in the corn belt was dominated by low temperatures
.
Snow showers in the Great Lakes region
.
Cold soil and wet fields continue to limit spring field work in the Eastern Corn Belt
.
As of April 10, corn planting has not yet begun in Midwestern states except Missouri, which has planted only 1% of its scheduled area
.

 

　　Strong growth in U.
S.
corn exports, strong domestic demand

 

　　The U.
S.
Department of Agriculture's weekly export sales report showed net U.
S.
corn sales for the 2021/22 season of 1,332,900 tons for the week ended April 7, 2022, up 70% from the previous week and 26% above the four-week average
.
Net sales in 2022/23 were 403,100 tonnes, up from 145,200 tonnes a week earlier
.
The data was at the upper end of the market's expected range
.
So far in 2021/22, U.
S.
corn export sales have totaled 55.
77 million tons, down 16.
5% year-on-year
.
Sales in 2022/23 have reached 2.
97 million tonnes, a year-on-year surge of 41.
4%
.
As of April 13, the price of corn in the US Gulf was 356 US dollars per ton, the Brazilian Paranagua port corn was 350 US dollars per ton, and the Argentine river was quoted at 313 US dollars per ton
.

 

　　U.
S.
government allows summer sales of high-ethanol gasoline

 

　　Domestic corn end-user demand has been strong this year as both the livestock and industrial sectors remain lucrative
.
Unlike last year, prices for alternative feeds such as feed wheat and barley are much higher than for U.
S.
corn
.
The recent announcement by the U.
S.
government to allow the sale of gasoline blended with 15% ethanol during the summer has also ignited demand for corn
.

 

　　In an effort to quell U.
S.
consumers' anger over soaring gasoline and dissatisfaction with the Biden administration ahead of the November midterm elections, the Biden administration recently announced a series of measures to calm fuel prices, including the sale of a record 180 million barrels of U.
S.
strategic crude oil Reserves; allow energy companies to lease U.
S.
federal exploration land for oil and gas extraction (contrary to Biden's campaign promises), and allow longer sales of E15 ethanol gasoline
.

 

　　But even if summer sales of E15 gasoline are allowed, ethanol sales between June 1 and Sept.
15 could increase by as little as 25 million gallons, or 595,000 barrels, and spread over several months, some analysts said
.
The market also questioned whether the plan could pass U.
S.
courts
.
Data released by the U.
S.
Energy Information Administration on April 13 showed that U.
S.
ethanol inventories stood at 24.
803 million barrels in the week ended April 8, down from 25.
903 million barrels a week earlier, but higher than the 20.
518 million barrels in the same period last year
.
Inventories for the same period in 2019 were 22.
676 million barrels
.

 

　　Ukrainian supply disruptions and an expected lower corn crop next season prompt China to make big purchases of U.
S.
corn

 

　　Private U.
S.
exporters reported sales of 1.
02 million tons of U.
S.
corn to China on Monday (April 11), a week after China bought 1.
084 million tons of U.
S.
corn, the largest single sale since May 2021
.
In the past few years, China has implemented the diversification of purchasing origin, buying millions of tons of Ukrainian corn every year, becoming the number one buyer of Ukrainian corn
.
However, due to the closure of Ukraine's Black Sea ports due to conflict since the end of February, and it seems that the recovery of supply is still far away, and the corn planting area in Ukraine may be significantly reduced in the next year, and the corn planting area in the United States is also expected to decrease by 4% year-on-year.
The problems also weighed on the outlook for next year's corn crop, prompting Chinese buyers to enter the market for U.
S.
corn
.

 

　　Ukraine's corn harvest is expected to fall by 39 percent this year to 23.
1 million tonnes, according to the Ukrainian Grains Association (UGA)
.
Corn exports in the next season could reach 20 million tons
.
Ukrainian wheat production is forecast to fall by 45% to 18.
2 million tonnes, with exports likely to be 10 million tonnes next season
.
Barley production is likely to fall by nearly 40 percent to 6.
2 million tonnes; exports next season are expected to be 2 million tonnes
.

 

　　However, in this month's supply and demand report, the US Department of Agriculture significantly lowered its forecast for China's corn imports, from the previous forecast of 26 million tons to 23 million tons, which was also lower than the record 29.
51 million tons last year, reflecting China's overall demand.
decrease
.

 

　　Another corn importer in Asia this week, South Korea, is also actively buying corn
.
South Korea's Nonghyup Feed Corporation (NOFI) tendered on Tuesday to purchase about 207,000 tons of feed corn, the origin of which is optional, but does not include the Black Sea origin.
The CIF price is $377.
55 to $379.
40 per ton, plus an additional port discharge surcharge of $1.
25 per ton.
Fee, a premium of 192.
00 cents/bu over Chicago July corn
.
The company purchased another 69,000 tons of feed corn on Thursday, with optional origin (excluding the Black Sea), and the CNF price is a premium of 202 cents/bu over the Chicago July 2022 corn futures price
.
Some importers are still buying despite high corn prices as there is no sign that the conflict in Ukraine will end anytime soon, which could mean continued disruptions to Black Sea grain shipments and prices could rise further, traders said
.

 

　　Upbeat outlook for Brazil's second-crop corn production

 

　　The outlook for Brazil's second-crop corn production remains bright and may hit a record high, which has also led to a recent decline in domestic corn prices in Brazil, with the largest declines in Minas Gerais, Mato Grosso and Sao Paulo
.
In southeastern Brazil, some farmers sold a batch of freshly harvested first-season corn, driving down prices
.

 

　　Brazil's National Commodities Supply Corporation (CONAB) expects Brazil's second-season corn production in 2021/22 to reach a record 88.
53 million tons, up 45.
8% year-on-year, due to increased plantings and favorable weather conditions
.
The agency also forecast first-quarter corn production at 24.
88 million tonnes, up 0.
6 percent from a year earlier
.
However, in a report this week, the private sector Agri Resources Brazil slightly lowered its forecast for Brazil's second-season corn production to 85.
11 million tons from 85.
13 million tons
.
The company expects Brazil's corn production in 2021/22 to be 108.
05 million tons, about 1.
23 million tons or 1.
15% higher than the 106.
82 million tons forecast in early March, mainly due to the increase of first season corn production from 19.
91 million tons to 21.
16 million tons
.
The forecast takes into account the damage caused by dry weather in Brazil's central and western regions in April
.