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– May Corn’23 (ZCK23) – May (ZCK23), which is now the effective front month, was up fractionally for the week at 0.47%. The market remains poised above the 100 & 200 day moving averages at 673.30 and 674.20 respectively. The upper trend-line is offering stiff resistance on any attempts to break out.
Looking for a decisive move above 680.00 basis K’23 with areas of support including 674.00 and 663.00.
– Last week, May’23 overtook March’23 making it our effective front month. Trading took place within a narrow 12.60 range between 667.40 and 680.00. Corn futures volume averaged 390,613 contracts across the board whilst open interest rose to 1.357 million.
– Despite another week of strong private export sales (1.16 million mt), the USDA cut ethanol demand by 25 million bushels on Wednesday but expectations are that this reduction is much higher. With no further use changes ending stocks were revised to 1.267 billion bushels.
– There is a growing concern that USDA will need to revise export demand downwards moving forward as we remain far behind the pace needed to meet the USDA’s objectives (table below courtesy of IAG). Total commitments are now at 26.79 million against the 48.9 million (-45.21%).
– The CFTC COT report has once again been delayed due to the impacts of the cyber-related incident at ION. Multiple reporting firms are still experiencing technical difficulties, which means the COT report will be delayed further until validation of reportable data is completed.
– Ethanol production fell to its lowest level in nearly a month. The Energy information Administration (EIA) stated the production of biofuel in the U.S. dropped to 1 million barrels per day. Inventories were also down week on week at 24.417 million barrels.
– Weekly Export Sales – Net Export sales for the period between 27th January – 2nd February 2023 totalled 1.16 millon mt. Japan, Unknown destinations and Mexicos were among the leading buyers.
– In the February WASDE (link below) report, the USDA made no adjustments to Brazilian corn or soybean production estimates despite CONAB’s reductions. The USDA pegged both crops at 125.00 and 153.00 million mt respectively. Argentinian corn production was lowered to 47.00 million mt from 52.00 mmt in January.
– Despite rains in recent weeks, the weather in Argentina has mostly been up and down with the significant drought lasting months earlier in the season. Rains this week are expected in Buenos Aires and some lighter rains in Cordoba and La Pampa.
– USDA South American Production – No changes for Brazilian corn & Soybeans production estimates. However; big changes were seen for Argentina as their figures came in far below trade estimates.
– The Soy harvest in Brazil is running slower than expected in some growing areas which is having a big impact on the Safrinha Corn crop. As of Thursday, Mato Grosso had planted 34% of their safrinha crop which was far behind last years pace of 57% and below the 5 year average at 48% (chart below).
– Some growers are weighing up the risks associated with planting late. The main issue being the impact on yields as frost and cold snaps become an increasing concern. The primary planting window closes around the 3rd week of February to ensure pollination is complete before the wet season rains shut down.
– Safrinha Corn – Chart showing the Safrinha Corn planting progress in Mato Grosso, running at 34% it is far below the 5 year average as delays to Soy harvest impact farmers ability to plant.
China’s corn production in 2022-23 is expected to be 277.2 million mt, a 4.6 million mt increase from the previous year. China holds contracts for 3.7 million tonnes of U.S. corn for delivery in 2022-23, which is 70% less than the same time last year. The country has been relying on Brazil for its corn imports due to the phytosanitary protocol approved in October 2022.
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