It is only the second day of March 2018 and already corn prices have had a lot to talk about. FOB corn prices, in particular, have been trending higher since December both in Brazil and New Orleans with help from ongoing concerns of drought in Argentina.
Just this week, FOB corn prices in Brazil and New Orleans jumped 23 and 20 cents a bushel respectively, as Argentina’s corn export estimate is likely to be cut further after the Buenos Aires Grain Exchange reported 76% of Argentina’s corn in poor-to-very-poor condition. Brazil’s closing FOB price of $4.55 a bushel was its highest in 11 months and 3 cents above the highest close in New Orleans in a year and a half.
In the case of New Orleans, the corn price got an added boost after the CME Group declared force majeure at corn shipping stations on Feb. 22. Steady and heavy rains from eastern Texas through the Ohio River Valley created flooding problems along the Illinois and Ohio Rivers, and are making it difficult to load and move grain to New Orleans where ships are waiting.
At the same time, Brazil’s FOB corn prices have also risen since Feb. 22. It is difficult to say if the gain was all due to Argentina’s drought or if there is some concern that Brazil is having problems with its second planting of corn, possibly due to wet weather in central Brazil.
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Brazil’s corn planting brings up another topic that will come up when USDA releases its next round of supply and demand estimates on March 8. So far, USDA has stuck to its Brazil crop estimate of 95.0 million metric tons, or 3.7 billion bushels, while Brazil’s government estimated 88.0 mmt, or 3.5 bb, on Feb. 8, closer to most private estimates. Even USDA’s attache for Brazil thought 95.0 mmt was too high in February, but was ignored in February’s WASDE report.
The good news for U.S. corn producers is that while both FOB corn prices are trending higher at Paranagua, Brazil and New Orleans, this is the time of year when the teeter-totter balance of supplies begins to favor U.S. export business for the next four months. So far, U.S. corn shipments are down 28% from last year, but rising FOB prices do suggest increased demand ahead, especially with Argentina’s corn crop suffering this year.
Todd Hultman can be reached at Todd.Hultman@dtn.com
Follow him on Twitter @ToddHultman1