Chicago Board of Trade Market News
Outlook:The unstable economic and political situations in South America and Ukraine have slowed corn marketing in those regions, and the United States currently has the most favorable pricing for global feed grains. The result is that U.S. corn export sales are moving at a fast clip. Presently more than 85 percent of USDA’s 2013/14 annual corn export sales forecast for the United States has occurred, in comparison to a rate that is normally closer to 65 percent. This fact implies that USDA is likely to increase their estimate for U.S. corn exports in the February WASDE.
South American weather is currently forecasting a warmer and drier pattern in central Brazil and improved growing conditions in Argentina. However, the Argentine crop is maturing and Brazil’s second corn crop is going into the soil. Drier conditions in Brazil could be momentarily favorable for planting, but soils in central Brazil do not have excellent water retention. As well, Brazil’s second corn crop acreage is already anticipated to be down by more than 10 percent. Global feed grain prices could start to work higher if Brazilian weather conditions do not transition back to more favorable patterns as the season progresses for the second corn crop.
A further increase in corn futures prices is likely to entice some U.S. farmer selling of corn, primarily to pay taxes and settle lease rates. However, U.S. farmers are not expected to substantially empty their bins for an additional 15 cents per bushel. Rather, they are more likely wait until the end of March to see U.S. acreage intentions and weather forecasts. In the United States, excessive moisture that causes planting delays often has more of a bullish influence on corn futures prices than do drier conditions that allow early planting. Prices commonly peak in May in years when there are concerns about planting delays.
Foreign buyers seem to recognize that the downside to U.S. feed grain prices is presently limited. The result is very strong U.S. corn exports, and also strong sorghum exports. U.S. sorghum exports are currently running about three times larger than last year.