NAPERVILLE: Chicago corn and soyabean futures have covered a wide range of prices so far this month in volatile trade as market participants bounce their focus among weather forecasts, global recession fears and geopolitical tensions.
US corn and soyabean supplies over the next year are seen mostly steady versus the current below-average levels, but much of that is yet to be determined by the next several weeks of weather.
CBOT corn and soya fell sharply on Tuesday with accelerated selling after the USDA numbers, but both contracts remained within the month’s span of 92 cents per bushel for corn and $1.68-1/4 for soyabeans.
December corn so far in July has averaged $6.01 per bushel and November soyabeans $13.63, in the lower end of the month’s ranges, and perhaps appropriately so given the projected balance sheets. The US Department of Agriculture on Tuesday updated its supply and demand outlooks, which for domestic corn and soyabeans showed ending stocks a bit heavier than trade estimates.
Corn stocks-to-use for the upcoming 2022-23 marketing year of 10.1% is down from 10.2% this year but up from last month’s peg of 9.6%. This reflects a tighter-than-usual situation as the ratio averaged 12% in the last decade, though the current corn price probably fits better with the forecast than the month’s high, observed on Monday. A year ago, USDA predicted 2021-22 corn stocks-to-use at 9.6%, and futures only modestly strengthened throughout July from the $5.45 per bushel average in the first seven sessions of the month.
In 2012, an early July average for December corn of $7.01 coincided with a stocks-to-use forecast of 9.3%, but traders knew this number was certainly headed downward due to the severe drought that had developed by mid-July, and that notion was correct.
Comparisons to 2012 surfaced last month, which turned out to be the second-driest June in the US Midwest in the last 30 years with just 64% of normal rainfall. That was behind 2012 of course, but this month has drastically separated itself from the drought year already. Ample rains moved across a good portion of the US Corn Belt within the last week, rescuing some parched crops from last month’s deficit. A warm and dry forecast in the weeks ahead was behind Monday’s price strength, but Tuesday’s outlooks turned wetter, suggesting decent rains could coincide with many corn fields’ pollination schedule.