The 30th of June US quarterly acreage and stock report was finally released. The expectations were huge as the report, especially the US acreage, would set the fundamental table for the rest of the summer. The report confirmed the very tight US stocks for the three major crops but more importantly, the corn and soya acreages were far lower than trade expectations.
These very disappointing figures took all markets up. Less than a minute after the report was released, corn was limit up, soya went up 6% and wheat, as usual, was only a follower. With lower-than-expected corn and soya acreage, yield potential will, from now on, be the only variable hope for a decent US crop. Therefore, all eyes will be watching the crucial US weather conditions in July.
Today being the 1st of July. We are now facing one full month of weather market. The situation is very mixed around the world and some new weather risks are rising. South Canada and North US are too warm and too dry. The South of Brazil is too cold with freezing temperatures upon the unharvested corn that could add a 2Mt loss to the already very low production forecast. Furthermore parts of Europe, including France, Germany, Romania and South of Ukraine are receiving too much rain.
All in all, the USDA report simply confirmed that our markets will remain very tight throughout 2021. In this context, grain and oilseed markets really need decent crops to remain balanced. Any new production risk will be very strongly priced , for now, it is hard to foresee any major downside for world prices. Current new crop prices are still very far from demand rationing levels…