17 Jun 2021

Our markets remain fully dependent on the US situation. US corn is the price driver for the global grain complex and soya leads the oilseeds complex. All eyes are currently staring at the US and volatility is extreme, illustrating how nervous the market is. Stocks are indeed very low for these two commodities and another crop failure, following Ukraine and Brazil, would take corn markets to an unprecedented tight situation. As such, US production needs to be strong. Otherwise, the only way forward would be to ration demand. However, we are not there yet…

This week was indeed driven by a bearish tone as the weather forecast is now improving with cooling temperatures and some very much needed rains. Even if the recent weather would certainly have already downgraded the potential for a record crop, these rains should arrive just in time to stabilize crop conditions.

US weather will therefore continue to be observed very closely ahead of the key June 30th stocks and acreage report. Many analysts are now much more optimistic and are expecting the US corn acreage to be much higher than the 92Ma published in March. Expectations range between 94 and 98Ma. This is clearly giving more hope for higher production. It is not as yet a given, we will need to wait another 2 weeks to get the final and key US acreage figure.

To add to this, the market did not appreciate the very recent reports that the Biden administration may grant biofuel waivers for struggling refiners. These talks have taken some shine off ethanol and soy oil rich biodiesel. This really came as a surprise as Mr Biden is a great supporter of renewable energies. We will certainly know more in the coming weeks. For the time being it is considered bearish soya and corn.

Looking ahead, a strong price drop seems unlikely amid US and Brazil weather challenges. Prices will continue to follow the daily weather forecast, day after day, until the end of July. For farmers, this volatile market provides nice selling opportunities when prices climb. Do not hesitate to catch them as both a bullish and a bearish scenario are on the table! The trend will be set in the next 6 weeks!

Sébastien Mallet