Corn prices aimlessly

There is no doubt that the markets in general have been subject to strong volatility due to many and varied factors, and the prices of corn quoted in Chicago have not been the exception, causing that today they do not have a clear course.

We started last week still with the surprising effects of the quarterly inventory report published by the United States Department of Agriculture (USDA) the previous Friday, which placed them at 34.98 million tons, that is, 3.43 million below what the market consensus estimated and 3.76 million below the report on supply and demand corresponding to the month of last September issued by the USDA itself.

The foregoing contributed to corn rising for four consecutive sessions, including that of Friday, September 30; however, it is important to highlight that the trading volume throughout the week was low, due, among other reasons, to the holiday in China that lasted the whole week and kept them out of the markets.

To the upward pressures of the aforementioned report, expectations were added about what OPEC + would do, which includes Russia, which had already been threatening for several days to announce strong production cuts that could reach 2 million barrels per day, which without doubt would push again, fuel prices upwards. On Wednesday they kept their word and the price of oil reacted accordingly, which undoubtedly affects the production costs of farmers, which are already high.

An additional factor for the moderate increases that we saw throughout the week was a robust weekly report of export inspections that placed it at 660, 430 tons, in the upper range of expectations, of which China would have imported 429,000 tons. from the Gulf and where only 2.5 million tons remain to be shipped for this business year versus the 10.64 million that were still missing last year, which tells us of a strong demand, which finally allowed last Friday for corn to December will close in positive territory, advancing 1.15% in the session to settle at 268.98 dollars/ton, in a session with little trading volume.

Despite this, various factors keep analysts inclined that corn prices could very easily take a downward trend. To begin with, the harvest is progressing very well.

On Monday it was reported that there is an advance of 20%, in line with expectations and only 2 percentage points below the average of the last five years.

The dry climate has been a very important factor in the previous advance; however, it has generated that the river system through which the harvested corn leaves to be transported by barge, is at really low water levels, which makes the transportation of corn enormously difficult and that the costs of transportation per person rise. river, causing inventories to build up and prices to fall.

The strength of the dollar as a result of the rise in rates in the United States makes the price of corn more expensive and less competitive compared to its South American competitors, where Brazil has already exported 45 million tons against 37 million last year and the shot of Grace came on Thursday with a disappointing weekly export report.

Corn fundamentals in the short term look bearish because we are in full harvest, there is low demand for export and the situation of the rivers generates a weak cash market, that is, it prevents farmers from selling.

This Wednesday we will have the USDA supply and demand report for October, which could provide greater clarity on the direction that corn prices could take.

We will have to be vigilant.

aga@gamaa.com.mx