Corn prices fell 7.8%, pressured by a drop in the oil market and data from the USDA report

Pessimism in the world markets, caused by the slowdown in the development of the world economy due to new outbreaks of Covid-19 and a possible economic crisis in the EU, and in particular in Germany, due to the stoppage of gas supplies from Russia, led to the collapse of oil prices.

September futures for Brent oil fell 7.8% yesterday to the lowest level since April – 99.51 $/barrel, and for WTI oil – 7.9% to a 3-month low of 96.48 $/barrel. Against this backdrop, corn also fell 7.8%, receiving little support from the USDA’s July report.

Investors have been selling commodity assets and buying U.S. government bonds to minimize risks, which has helped the dollar strengthen to a 20-year high.

In the July report, USDA experts made most of the changes to the corn balance sheet for 2021/22 MR, where they increased the global production forecast by 1.8 million tons to 1.2178 billion tons, and the estimate of ending stocks by 1.36 million tons to 312, 28 million tons, although analysts estimated them at 311.3 million tons. For Argentina and Brazil, the corn harvest in 2021/22 MR was left at the level of 53 and 116 million tons, respectively.

The balance sheet for the 2022/23 FY compared to the previous report underwent the following changes:

• The estimate of initial reserves was increased by 1.36 million tons to 312.28 million tons (293.29 million tons in FY 2021/22 and 306.37 million tons in FY 2020/21).
• The forecast of world production was left at the level of 1.1859 billion tons (1.2178 billion tons in 2021/22 MR and 1.129 billion tons in 2020/21 MR). It is expected that the increase in production in the USA by 1.1 million tons to 368.44 million tons (383.94 million tons in FY 2021/22) will compensate for its decrease in Russia by 1 million tons to 14.5 million tons (15.23 million tons). Estimates for Ukraine, China, Brazil and Argentina were left unchanged, while for the EU they were cut by 0.25 million t to 68 million t (70.5 million t) due to drought in southern and eastern Europe.
• The estimate of world consumption was reduced by 1 million tons to 1185.24 million tons (1198.88 million tons in 2021/22 MR and 1143.29 million tons in 2020/21 MR).
• The global export forecast was left at the level of 182.57 million tons (199.23 million tons in 2021/22 MR), but for Ukraine, the estimate was lowered from 23 to 9 million tons.
• The forecast of world imports was increased by 0.4 million tons to 177.08 million tons (179.15 million tons in FY 2021/22) due to increased purchases by Southeast Asian countries. For the EU and China, the import forecasts were left at the level of 16 and 18 million tons (16 and 23 million tons in 2021/22 FY).
• The estimate of final reserves was increased by 2.49 million tons to 312.94 million tons (312.28 million tons in 2021/22 FY and 293.29 million tons in 2020/21 FY), in particular for the USA – by 1.78 million tons to 37.33 million tons (38.35 million tons in 2021/22 FY and 31.36 million tons in 2020/21 FY).

December corn futures on the Chicago Stock Exchange yesterday collapsed by 7.8% to $230.9/t, losing the growth of the previous week, and in general for the month they fell by 23% to the level that preceded the start of the war in Ukraine.

October futures for Black Sea corn in Chicago yesterday fell by 2.7% to $317.75/t (-6.7% for the month).

November corn futures on the Paris Euronext yesterday fell by 3.4% or €11/t to €315.5/t or $315.9/t (-6% for the month).

Tags: USDA Report, USA, Ukraine, China, corn, EU, prices