Tuesday, July 28, 2020

Platts: "US corn prices seen weak amid limited demand recovery, easing weather concerns"

From S&P Global Platts, July 28;
  • CBOT prices slip from 3-month highs seen earlier
  • Ethanol demand uncertain as US revamps COVID-19 restrictions
  • Platts Analytics sees 2020-21 corn exports below USDA's estimates
  • US corn crop conditions improve, near-term weather seen favorable
New Delhi — Corn prices in the US are likely to be subdued in the upcoming three-four months as importers and ethanol manufacturers see limited demand while easing weather concerns point toward a big corn crop, analysts said.

US corn prices gained substantially in the beginning of July on the back of acreage and production estimate reductions, but that uptick in prices was short-lived as demand concerns for US corn started surfacing soon after.

"Demand is always the driver for prices in my opinion and that's why the market is back down to these levels despite the 5 million acres cut in expected acreage less than a month ago," said Pete Meyer, head of Grains and Oilseed Analytics at S&P Global Platts Analytics.

The US Department of Agriculture on June 30 cut acreage estimates for US corn in the 2020-21 marketing year (September-August) by a surprising 5 million acres to 92 million acres.
The prices of corn rose on the Chicago Board of Trade following the acreage cut and the front-month September contract touched a three-month high of $3.50/bushel on July 1.

CBOT corn prices now have slipped back to previous levels. The September futures contract settled at $3.25/bu on July 27, almost testing the levels seen before June 30.

After the unprecedented stall in production due to collapsing prices of crude oil and demand-destruction due to COVID-19 restrictions, ethanol output in the US picked up in the last few months. However, the fuel output recently witnessed its first setback following the recovery....