Corn prices continue to fall as crop forecasts are cut and recessionary fears influence the market.
Corn futures slid further this week, with the May 23 contract falling.
Corn export sales were sizable last week, though this comes as USDA lowered the export estimate in the March WASDE, down YOY.
USDA did slash Argentina’s crop forecasts close to recent trade estimates: corn and soy were both cut down several MMT.
Russia/Ukraine grain deal talks are ongoing, including a UN meeting with Ukrainian President Zelensky Wednesday. A second export corridor deal now seems likelier than not as the Mar. 18 expiration of the current deal approaches, but Russia continues to downplay the likelihood of a new deal.
Brazil’s safrinha crop is about 70 percent planted, leaving a good chunk of the crop more vulnerable for the dry season in May and during key pollination.
Corn-based ethanol output in Brazil is expected to rise in 2023/24.
Fed chairman Jerome Powell has again stated that interest rate hikes may accelerate if needed—February CPI and PPI data will be out next week. Economists now anticipate a 50-point hike at the end of the month.
The February jobs report was higher than expected, up by 311,000 jobs while projections were closer to 205,000 jobs added.
China announced target GDP growth at 5 percent for 2023, helping lift crude oil prices earlier in the week. Prices quickly retreated later in the week on fears of slower economic growth and recession.
Natural gas inventories hit a 6.5-year high Thursday, pushing natural gas prices to a two-week low.
Corn prices continued their pullback this week on macroeconomic and recessionary fears combined with an improved 2022/23 U.S. corn balance sheet in the March WASDE. The dramatic cut for Argentina corn and soy crops was mostly anticipated, and USDA merely matched trade estimates.
Corn futures could be leveling out in the not-too-distant future and begin a sideways pattern until the Mar. 31 prospective plantings report and the start of spring weather. Right now, more forecasts hint at cooler, wet weather, which could delay planting in the US for a second straight year and push some weather risk premium back into the market.
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