US: Early harvest of corn and financial picture pressure CBOT again

The US harvest of corn is advancing in late September, also as a result of the drier and warmer climate, accelerating the maturation process. It is a small crop, at least in the adjustments promoted by USDA, but 354 million tons exert their natural influence on prices. Meanwhile, some pieces of information generate volatilities. The worsening of tensions over the war in Ukraine and the pressures of the financial sector on the commodity market cause impacts that disorient the natural and seasonal trajectory of prices. The additional factor involves exchange rate decisions in Argentina, which cause price distortions in some commodities in the global scenario, including the soybean complex.

The international corn market is now experiencing some variables that can be considered “uncertain” in their trends, but are too relevant for prices. We can summarize these questions in the following points:

– Global financial framework. With the continuation of rising interest rate, it seems normal for funds and investors to withdraw part of their capital from the commodities market, including the agricultural ones, in which corn is included;

– The sharp decline in oil prices causes the demand for ethanol to decline or, at least, an adjustment of prices to the more competitive level of gasoline, a fact that puts pressure on corn, among other commodities;

– The US harvest is advancing and, seasonally, prices drop with the crop arrival. This year, prices are at record highs for a harvest season in the United States. Would it be normal for producers to reap and sell their crop due to the great prices?

– There is a global demand to be met by the US crop, and exports can be a balance point for this harvest pressure in the USA;

– The crisis in Ukraine is accentuated, keeping at risk the export corridor provided by an agreement between Russia and the UN. The absence of the corridor might affect the wheat and corn markets. For now, the flow remains within the expected for the export corridor, even with local analysts raising the Ukrainian corn crop to 30 million tons;

– Argentina is uncertain about its economic situation and starting to adopt measures that could harm the export sector, such as preventing exporters from holding foreign currency reserves at the central bank. In this case, the inflow of export revenue would immediately be converted into pesos and, in a hyperinflation situation, exporters do not want to have pesos in their reserves. The situation could quickly deteriorate, even halting the activities of some trading companies in the country;

– The 22/23 crop in South America has been planted in a year again of a weak La Nina so far. The “weather market” in South America begins, and its result will determine either sharper price lows in 2023 or a new resumption of highs;

– The devaluation of the Chinese currency is a major factor of pressure on the commodity market appraised in dollars, both in the items that China exports and imports. Among these products are beef, soybeans and wheat.

All these indicators will move prices in the coming weeks and must be considered relevant points.

Tags: corn, USDA, prices, US, crop, commodity market, Ukraine, harvest