Chicago Board of Trade Market News
Outlook: Corn market futures are up 9 ½ cents (1.5 percent) from last Friday’s close as the conflict in Ukraine, short covering, an uptick in export sales, and a weaker U.S. dollar helped support corn values. With the Northern Hemisphere corn crops all harvested and the Southern Hemisphere crops largely still waiting to be planted (except for the Argentine early corn crop that is entering pollination), there is little fresh input for corn markets. Exports continue to be closely watched around the world, as well as the Argentine drought.
Attack to the port of Odessa
CBOT markets rallied early this week after Russia attacked the Ukrainian port of Odessa last weekend. The port is one of three that were supposed to be protected under the United Nations-brokered Black Sea Grain Initiative and the attack caused questions as to Russia’s commitment to the agreement. The port was operational again on Monday afternoon and eight vessels were reportedly loaded on Tuesday. Early week reports indicated there were another 23 vessels in the lineup waiting to load various grains for export. The weekend attacks highlight the risk present in the Black Sea and global grain markets and the uncertainty surrounding global grain export potential.
Forecasts according to WASDE report
The USDA issued its December WASDE report last Friday and made few changes to the U.S. and world corn balance sheets. USDA cut the U.S. 2022/23 export forecast by 1.91 MMT (75 million bushels) due to the current export pace and added the same volume to 2022/23 ending stocks. U.S. corn ending stocks for this marketing year are pegged at 31.93 MMT (1.257 billion bushels), down 8.7 percent from 2021/22 and the second smallest in the past nine years.
Outside the U.S., USDA left its forecast of the Brazilian and Argentine 2022/23 corn crops unchanged but lowered world production by 6.5 MMT. World ending stocks were reduced 2.355 MMT to 298.4 MMT, down 2.8 percent from last year.
The Export Sales report featured 0.958 MMT of net corn market sales last week, which was up 39 percent from the first week of December. U.S. exporters shipped 0.59 MMT of corn last week, down 34 percent from the prior week. YTD corn exports total 7.263 MMT (down 38 percent) while YTD corn bookings (exports plus unshipped sales) total 20.002 MMT (down 48 percent).
Raising interest rates
Macroeconomic markets are exerting influences on the corn market as well. The U.S. Federal Reserve continues to raise interest rates to combat inflationary pressures. The interest rate increases are starting to lower inflation, which is putting pressure on the U.S. dollar. The U.S. dollar index is down near 104.6 as of this writing, well below its late-September highs near 114. The weaker U.S. currency aids the competitiveness of U.S. grain on the world market and should help bolster U.S. corn exports.
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