CBOT Corn’s price curve appears to have settled in its new range of USD 5.00 to USD 6.00/bu through July 2023, reflecting at least a couple of years of farmers’ inability to satisfy consumers and a gradual recovery from an historic imbalance. As crops deteriorate, hedge funds are re-entering on the realization that this harvest won’t be a panacea.Īrable acreage inelasticity, weather adversity, and irrepressible demand make today’s corn market a challenge for consumers and farmers alike. Over the last three months, hedge funds sold half of their record accumulated length, which certainly eased prices from eight-year highs for the most part, however, consumers have been accepting fund (and farmer) sales with both hands. That is why there have been very few large breaks in the one-year CBOT Corn bull market. As availability grows (and prices weaken) over time, absent consumers will return to meet it. Coarse feed grain import demand (2021/22 seen flat to 1% lower YOY) isn’t being destroyed altogether, but deferred to a later date. In practice, the pain (price) of the world’s primary feed grain, corn – as well as alternatives like feed wheat, barley, and sorghum – has risen to levels that induces demand rationing among consumers.

Despite increased domestic production incentives and historic feed switches, Rabobank expects China’s import demand will remain strong over the coming years.Ĭorn Buyers Face Years of Supply Challenges An equally important question is whether China’s feed grain import dominance will continue. Much depends on Brazil’s ability to deliver a production rebound in 2022 – both for the domestic demand crop in February and the export-bound safrinha crop in June. A modest increase in US ending stockpiles isn’t foreseen until 2023 at the earliest, and these could easily be 25% below the 2013-2020 average of 1.9bn bu. a five-year average of 17%), and its ending stockpiles will remain grounded near 1bn bu.

US 2021/22 corn export sales will see little relief (2021/22 is already one-third committed before the start of the season, vs. Moreover, a CBOT Wheat-Corn spread of USD 2.00/bu, the highest since January, does not herald a large demand switch from corn to wheat. With the Brazilian pressure release valve unavailable, improvements in Ukraine 2021/22 production (+9mmt YOY) and a deluge of French feed wheat will not provide sufficient relief to feed grain markets. Complicating matters further is Brazil’s recent safrinha harvest failure, its ongoing dryness, and the specter of La Niña’s return that will leave it unable to shoulder its typical 20% share of world corn exports. US 2021/22 corn production has been hobbled by arable acreage limits (+2% YOY), crop competition (CBOT Soy is up 40% YOY), expanding drought (presently 37% of corn acreage), and the resulting erosion in crop conditions (60% Good-Excellent, 5% below the five-year average).

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