Global food market: Brazil is about to see severe frost and corn prices will rise

 

On Friday, the Chicago Board of Trade (CBOT) December 2021 futures were up 35 cents, or 6.
77%, to close at 552 cents/po
.
The quotation of Meiwan No.
2 yellow corn fell by 93.
25 cents or 12.
43% from a week ago, to close at 657 cents per cat
.
The corn futures for delivery in November 2021 on the EURONEXT exchange closed at about 203.
75 euros/ton, up 11.
25 euros or 12.
27% from a week ago
.
The FOB spot price of Argentine corn in Shanghe was US$247/ton, an increase of US$27 or 9.
84% from a week ago
.
The September corn futures on the Dalian Commodity Exchange closed at 2,589 yuan/ton, up 22 yuan from a week ago
.

 

　　International crude oil futures continued to fall this week, as Saudi Arabia and the UAE reached a compromise, paving the way for the OPEC alliance to increase production
.
At the same time, the highly contagious delta mutant strain is raging in many countries, raising concerns that further blockade measures may harm the recovery of fuel demand
.
On Friday, the New York Mercantile Exchange (NYMEX) West Texas Intermediate Crude Oil (WTI) August contract was reported at 71.
81 yuan/barrel, down 3.
69% from a week ago, marking the biggest weekly decline since March
.
Brent's September crude oil futures closed at $73.
59 per barrel, down 2.
67% from a week ago
.

 

　　On Friday, the US dollar index closed at 92.
71 points, up 0.
7% from a week ago
.

 

　　Overall, the focus of the corn market's close attention is on the weather prospects in the midwestern United States and the central and southern regions of Brazil
.
Due to the tight supply of mature corn in the United States and the key yield formation period of the corn crop, the weather and market have outstanding characteristics of speculation
.
This year's corn in Brazil is unfavorable, showing that the drought has delayed planting.
After that, low temperature and frost occurred in the central and southern regions for three consecutive days, which caused damage to the second crop of corn
.
The weather forecast will see severe frost in all areas of central and southern Brazil next Monday, which will set the tone for the increase in corn prices
.

 

　　The weekly crop report released by the US Department of Agriculture on Monday showed that as of Sunday, the excellent rate of US corn was 65%, an increase of 1% from a week ago, but 4% lower than the same period last year
.
Weather forecasts indicate that dry weather may occur in the Midwestern United States in the coming week, and the corn crop is currently in a critical period of yield formation
.
The US Department of Agriculture's supply and demand report released on Monday estimated that the US corn production in the 2021/22 year was 15.
165 billion bushes, which was 175 million bushes higher than the previous month's forecast.
This is because the harvested area data was revised up to 84.
5 million acres, which was higher than the June forecast The value is nearly 1 million acres higher
.
Yield data remained unchanged at 179.
5 bu/acre
.
However, due to the increase in usage, the US corn ending inventory data for 2020/21 has been revised down by 25 million bu, to 1.
082 billion bu
.
The ending stock of corn in 2021/22 is estimated to be 1.
432 billion bucks, 75 million bucks higher than last month's forecast
.
However, by historical standards, the supply is still tight, and the inventory-to-use ratio is only 9.
6%
.

 

　　The U.
S.
Department of Agriculture also lowered Brazil’s corn production forecast from 98.
5 million tons to 93 million tons, as the second-season corn production area suffered extensive drought and frost damage, resulting in a 5.
5% reduction in yield to 4.
7 tons per hectare, a five-year low
.
The U.
S.
Department of Agriculture has raised the 2020/21 Argentine corn production by 1.
5 million tons to 48.
5 million tons, because the planting area data has been raised, and the harvest results also support the increase in corn yield
.
Currently, 60% of the corn harvest in Argentina has been completed
.

 

　　This year, Brazil’s second-season corn production suffered a double blow from drought and frost, prompting analysis agencies to lower their forecasts for Brazil’s corn production
.
The consulting agency AgroConsult estimates that Brazil’s second-season corn output in 2020/21 will be 65.
3 million tons, which is lower than the 66.
2 million tons predicted in May
.
StoneX reduced the second-season corn production in Brazil to 60.
45 million tons, and cut the total output of Brazil's corn in 2020/21 by 1.
75 million tons to 87.
93 million tons
.
Safras & Mercado expects Brazil’s second-season corn output to be 61.
6 million tons, 22.
4 million tons lower than initially expected
.
AgRural estimates that Brazil’s second-season corn output will be 59.
1 million tons, down from 75.
1 million tons in the previous year
.

 

　　According to Safras & Mercado, as of July 9, 15.
3% of the second-season corn harvest in Brazil was completed, compared with 31.
8% in the same period last year, and the average progress in the past five years was 27.
1%
.
AgRural said that 20% of the second-season corn harvest in central and southern Brazil was completed, up from 12% a week ago and lagging behind 35% in the same period last year
.

 

　　According to the Brazilian Association of Grain Exporters (ANEC), Brazil’s corn exports in July 2021 may reach 3.
03 million tons, higher than last week’s forecast of 2.
37 million tons
.
July is the most concentrated time for the second season of corn harvest
.
Compared with June, exports in July increased significantly because Brazil only exported 90,000 tons of corn in June
.
But it is 2 million tons lower than the 5.
1 million tons exported in July 2020
.

 

　　It is reported that due to the severe reduction in the second season of corn production, the price of domestic corn in Brazil is at a significant premium relative to the export price, prompting Brazilian traders to cancel corn export contracts and give priority to supplying the domestic market to meet the needs of the breeding industry
.

 

　　Brazil's reduced corn production will boost the outlook for US corn exports, especially in the first half of the 2021/22 season
.
The U.
S.
Department of Agriculture this month predicts that US corn exports in 2021/22 will reach 2.
5 billion cats, which is 50 million cats higher than last month's forecast
.