The corn market is holding steady despite hits to its three major demand categories, weather variability, and political uncertainty.
Mar-23 corn closed a bit higher this week, although, analysts expect global corn ending stocks to fall by about 2 MMT in this week’s WASDE report.
Although the Brazilian corn crop forecast is expected to remain relatively unchanged, the trade predicts Argentina’s production to fall from the current forecast of 47 MMT.
U.S. ethanol production fell in the week ending Feb. 24, another indication of a plausible cut ahead in USDA’s projection for corn use in that category. In January, corn use for ethanol was down YOY.
With La Niña weakening, weather variability remains a factor for pricing. Dryness is persistent in Argentina and in parts of the Canadian prairies and the U.S.
Uncertainty remains regarding the extension of the Black Sea export corridor deal between Russia and Ukraine. The deal expires mid-March, and with Erdogan facing major domestic issues, it is feasible the deal may lapse briefly.
The market awaits this week’s WASDE for USDA adjustments to Argentina’s production and the impact on global ending stocks. Argentina has been getting much of the attention, but it’s also worth following Brazil, where wet weather is delaying planting of the safrinha crop, increasing the risk of problems during the April/May dry period.
Consumption appears to be weakening, as well. For corn, all three major demand categories are taking hits that could ultimately boost 2022/23 carryout. Corn-derived products are arguably also showing demand pressure, particularly starch category, potentially indicative of building economic weakness. The longer-term trend for corn futures may be turning bearish—weather permitting.
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