World Grain - May 2018 - 26

GRAINMARKET REVIEW

Monthly corn prices

Coarse grains

200

Crop uncertainty bullish for corn

150

by Chris Lyddon

100

Crop uncertainties have pushed up corn prices in some parts of
the world, notably as the market eyed Argentina's weather. Barley
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were lower.
"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 ReSRUWIRU0DUFKWKDWLWVFRUQVXELQGH[URVHIRUWKH¿IWKPRQWKLQDURZ
to 8% up from the previous month and 16% up from a year earlier.
"Prices were lifted by uncertainties about South American outWXUQVDVZHOODV¿UPH[SRUWGHPDQGDQGWLJKWORJLVWLFVDWVRPHRULgins," 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 Council also reported a strong market in Ukraine, "on solid
demand from traditional buyers, including the E.U., Egypt and China, and currency movements."
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."
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"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.
26

(in U.S. dollars per tonne)

Sep 17 Oct 17 Nov 17 Dec 17

Jan 18

Feb 18 Mar 18

Source: U.S. Department of Agriculture; World Bank.

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,"
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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,"
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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.
³6HYHUDO FKDQJHV UHÀHFWLQJ SURGXFWLRQ UHYLVLRQV VKLIWV LQ IHHGing 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
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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.
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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May 2018 / World Grain / www.World-Grain.com

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World Grain - May 2018

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