The Metals Complex Rallies

Agriculture

The Agri complex continues to move higher, with CBOT corn and wheat settling up around 3.8% and 4.1% respectively yesterday, whilst soybeans were up almost 2% on the day. The major catalyst for the move continues to be dry and cold weather in the US and Brazil, which has raised concern over the impact it could have on production. These supply concerns are coming at a time when demand remains strong, with the latest weekly data from the USDA showing that US corn export inspections increased to 1.95mt over the last week compared to 1.56mt in the previous week and 1.08mt during the same period last year. Year-to-date export inspections for corn have increased 83.9% YoY to 41.2mt.

Meanwhile, the monthly MARS bulletin from the European Commission pointed to a cold and dry spell in Europe for much of March and April, which provided further support to wheat. The Commission has not made any significant revisions to its wheat yield estimates for now; however, adverse weather continues to be a risk. The European Commission expects wheat yields in the region to average around 5.64t/ha for the 2021 crop, compared to an earlier estimate of 5.67t/ha and the 5-year average of 5.47t/ha. Adding further support to wheat was a report from India stating that government procurement of wheat has accelerated this year to provide relief to farmers during Covid-19 times, which could lead to smaller exports for the current season. The Food Corporation of India is reported to have purchased around 20mt of wheat since the beginning of the season on 1 April, more than a four-fold increase from the same stage last year.

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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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