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About Corn, Hunger Estimates, Markets & Rain Days Update 5/9/22

Highlights


The United Nations estimates the war in Ukraine could cause the number of humans facing acute hunger to rise by 47 million to 323 million worldwide.


The US and the 6 other G7 countries vowed Sunday to defend Ukraine’s "sovereignty and territorial integrity." The G7 said they were committed to undertake further commitments to help Ukraine secure its free and democratic future.


The Group of Seven is the top seven, non-communist financial powers: USA, Canada, France, Italy, Germany, the UK and Japan. The pledge was made to Ukrainian President Zelensky.

 

Let’s Talk About Corn


Except for a few months, corn was less than $4 for six years (2014 -2020).


The low priced corn for such a long time built a huge demand base which led to the tremendous rally into the harvest of 2020 that extended through March 2021. Then the late planted second crop of (safrinha) corn in Brazil suffered a dry April 2021.


Old crop corn futures rallied $1.75¾ in April 2021 and then gained another 30 cents the first week of May to make the high for last year on the 7th at $7.76½ on old crop and $6.38 on new crop.


The market traded sideways for two months into July and then December corn lost $1.73 the last three weeks of July as the market saw the crop was being made and priced it.


Another 50 cents were lost by September 10th to $4.97½, the fall low. The price has been all up since then through April 2022.


The old crop high this spring was $8.27, made the last business day of April, the 29th. December 2022 corn made its high at $7.57, also on April 29th.


This morning, old and new crop futures are about 45 cents below their April 29th highs one year after the 2021 highs were made. The good news, even at 45 under the 2022 highs, old crop corn is 3 cents and December corn is 77 cents above the contract highs of 2021.


For the next three weeks, the number one corn fundamental factor is rain on Brazil’s safrinha corn in Mato Grosso. Then weather in the Corn Belt will dictate price direction June through July. As soon as the market thinks the USA 2022 crop will be made, the price decline will be more than last year’s $2.23 from the contract high to fall low. It should be easy to capture a buck of that price decline with puts.


Below is the chart of the total number of rain days in the ten-day forecast for each month, January through April for 2021 and 2022. The number groups circled are the number of rain days in 2022 more or less than the rain days for those same locations in 2021.


As you consider the rain day differences, keep in mind:

Brazil’s safrinha crop was planted about 4 weeks late last year whereas this year it was planted normal to maybe a week sooner than normal. That means the crop will have about 4 weeks more maturity when the dry season begins. The dry season usually gets seriously dry mid to late May.


About 40% of the safrinha crop is grown in Mato Grosso. That is where Rondonópolis is located. Mato Grosso is 2½ times the land area of Texas. All of Brazil's exportable corn is second crop production.

The old and new crop corn carryovers are within a few days’ supply for the USA and world as they were one year ago this week.

EarthDaily Agro reported Mato Grosso’s April rainfall was the least for an April in 17 years at 1.2 inches (30 mm), down 70% compared to the average over the last decade.

The number of rain days predicted in the ten day forecast for Rondonópolis the first nine days of May a year ago was one (1). Take a look at the rain day chart below to see how many rain days were predicted this year for the Rondonópolis area the first 9 days of May.

On Thursday, 10 AM Mountain time, the USDA will release its monthly S&D. May is the first month the USDA includes the new crop production and demand. For the year's crop production, they almost always take the March intended planted acres minus corn silage and abandoned acres times trend yield, which, this year, is 49.1 wheat, 181.0 for corn, and 51.5 for beans. What we do not know is what will the USDA do with all the other countries of the world 2022 production and new crop domestic and world demand.

The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/


 

Market Data


This morning:

Crude oil is at $109.32, down $0.45

The dollar index is at 104.06, up 0.40

July palm oil is at 6,408 MYR, up 8. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton is at $123.52, down $0.22 per cwt. The contract high was made May, 4th at $129.91 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas is at $8.209, up 0.081. The contract high was made May, 6th at $9.052. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $3.8027 per gallon, up 0.0139. The contract high was made May, 5th at $3.9282. ULSD stands for Ultra Low Sulfur Diesel.


 

Rain Days Update


The Western Corn Belt has 4 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 more rain daysthan yesterday.


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