However, more favorable weather is forecast for large parts of the US corn and soy area, providing planting confidence, said CRM Agri in a report released yesterday.
Wheat prospects
Droughts, though, in parts of the US continue to provide support for new crop wheat markets. In addition, US winter wheat area and dryness in key regions of northern Europe are growing concerns, said the grain market specialists.
“As production outlooks in India come under pressure, a potential reduction in global export availability is likely, placing additional importance on European wheat in 2022/23.
“Overall, there remains upside in UK feed wheat relative to European markets. Global wheat markets also remain supported and at a record premium to corn, but we are wary of a market reversal as we get closer to harvest.”
Increasingly bullish corn market
US corn exports continue to buck the seasonal trend of slowing as spring approaches, largely due to the war in Ukraine, which is forcing China to purchase both old and new crops to replace lost supply from the Black Sea, said that team.
The May WASDE—out later this week—should confirm a tighter outlook for both US and global ending stocks in corn, they commented. In addition to the potential tightening of US stocks as export sales continue at pace, Brazilian corn supplies are also likely to be trimmed in that USDA review, they said.
Drought conditions across Brazil’s Mato Grosso are reducing yield potential for second corn crop.
“A persistent narrowing of US stocks, a deterioration of Brazilian second corn yields and the ongoing war in Ukraine are the key factors driving bullish sentiment in the market,” concluded the CRM Agri team.
Soy situation
An AHDB report outlined how forecasts for a dry, warm period in the US, if they come to pass, would allow soy farmers to aggressively ramp up their planting campaigns, in addition to currency pressures negatively impacting on US exports.
There were concerns, at the end of last week, over global soybean supplies arising out of diminished Brazilian exports. “In April, Brazil exported 11.58Mt of soybeans, down 28% on the same period last year,” noted those commentators.
While down overall from January to April 2022, year on year, China’s soybean imports are expected to increase in April, said the AHDB team, on the back of a number of factors, one being an improvement in Chinese pig production margins, which should hike crush demand.
Palm oil prices recovered slightly at end of last week, after falling on expectations the Indonesian export ban could be lifted, added those market experts. “However, it is currently unclear how long the ban will last. Indonesia’s April palm oil stocks are expected to show a rise for the first time in six months, to 1.55Mt, according to the latest Refinitiv survey.”
