World Grain - September 2019 - 16

GRAINMARKET REVIEW

COARSE

GRAINS

Corn prices in the U.S. since 2010
(dollars per bushel)
8
7
6

2020

2019

2018

2017

2016

2015

2014

A sharp upward revision in the U.S. Department of Agriculture's forecast in the Aug. 12 World Agricultural Supply and
Demand Estimates for the U.S. 2019-20 maize crop sent prices lower in mid-August.
In a weekly newsletter published Aug. 20, the European
Confederation of Maize Production (CEPM) described the
upward revision of the U.S. crop by 660,000 tonnes "surprising for all market observers."
The U.K.'s Agricultural and Horticultural Development
Board said the new USDA production forecast for the United
States at 353.1 million tonnes was up by 0.7 million on July's
release and 2.6% above the top end of industry estimates. The
planted area, at 36.4 million hectares, was 1.9% above the
86'$¶V-XO\¿JXUHDQGDERYHWKHKLJKHVWLQGXVWU\HVWLmates. The yield estimate, at 11.4 tonnes a hectare, was 2.8%
above industry estimates.
CEPM noted that other bearish elements include pressure
from the South American harvest and the outlook for Ukraine.
³:LWKWKHHQGRIWKHKDUYHVWVWKH¿UVWDFUHDJHIRUHFDVWVIRU
the new crop year are emerging in South America," CEPM
said. "In Brazil, the maize acreage will depend on soybean
sowing, but farmers should be encouraged to sow maize because of good conditions this year."
The European trade group also said Maizar, the organization
of Argentinean producers, "expects an acreage increase of 5%
to 10% for the same reasons, but the political context should
still be monitored with the presidential election in October."
It explains that President Mauricio Macri, who has undertaken to end export taxes on agricultural products, unlike his
opponent, is struggling in the polls.
"Moreover, the prospect of Mr. Macri's defeat contributes
to the fall of pesos rates," CEPM said.
At the same time, the level of European maize imports has
been high since July 1, particularly in Benelux (Belgium, the
Netherlands and Luxembourg) and Spain.
"Operators in these countries are protecting themselves in
the face of uncertainties about the French harvest, the weakness of the Ukrainian stocks from the old harvest, and the good
competitiveness of Brazilian maize," CEPM said. "However,
the maize import projection for the 2019-20 crop year is down
from the previous crop year due to the good availability of
straw cereals."

2013

4
2012

by Chris Lyddon

2011

2010

WASDE surprise sends maize lower

Source: U.S. Department of Agriculture

The U.S. Grains Council, in its Market Perspectives dated
Aug. 15, also highlighted the fall in maize futures.
"Funds were holding a slight long position heading into the
(USDA) report and have since largely exited that and are believed to be neutral or slightly short corn," the Council said.
"Looking forward, summer crop tours will bring additional
yield forecasts to the market's attention and early reports sugJHVW ¿QDO \LHOGV PD\ EH ORZHU WKDQ WKH 86'$¶V ODWHVW HVWLmate."
As well as the surprise change for maize, the USGC also reported that the United States had increased its forecast for the
country's 2019-20 sorghum crop by 15% to 7.707 million tonnes.
"The agency increased its expectations for feed and residual
use but kept its export forecast unchanged, leaving a 23% increase in ending stocks," the USGC noted.
There were few changes for barley, with yield revised up by
1%, while the oat yield was revised down by 2%.
"Internationally, USDA increased the world corn 2019-20
production estimate to 1.108 billion tonnes on larger crops in
the U.S., Ukraine and the E.U.," the USGC said. "The E.U.
crop adjustments were made largely on much better-than-expected crops in Eastern Europe that outweighed the heatwavereduced crops in France, Germany and Poland.
"The agency also increased world ending stocks to 307.7
PLOOLRQWRQQHVWKRXJKWKDW¿JXUHLVVWLOOORZHUWKDQ
19."
From a technical standpoint, December corn is stabilizing
DIWHULWVVWHHSSRVW:$6'(VHOOR൵DQGLVQHDUPDMRUWHFKQLFDO
support, the USGC said.
It suggested that "the market could bounce back from its
UHFHQW ORZV HVSHFLDOO\ LI FURS WRXUV FRQWLQXH ¿QGLQJ VSRWW\
yields."
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
We want to hear from you - Send comments and inquiries to
worldgrain@sosland.com. For reprints of WG articles, e-mail reprints@sosland.com.

September 2019 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain - September 2019

Table of Contents for the Digital Edition of World Grain - September 2019