Market Analysis

The corn market’s focus will be split on March 31 between the USDA’s prospective planting and quarterly stocks reports later this week. The first US survey-based planting intentions data normally gets the most attention that day, but the USDA’s quarterly stocks are important touchstones on how the US demand levels have performed in the first half of the crop year.

After a strong fall quarter, 2021/22’s winter quarter’s US FSI (ethanol) corn demand continued its recovery to its traditional seasonal output with strong US gasoline prices and processing margins boosting its output. This year’s 2nd quarter usage sprung back over 200 million bu to 1.72 billion bu. A high portion of the US being vaccinated and no extreme weather to shut down the Midwest biofuel plants this past winter helped boost this demand.

Once the US soybean export program began to moderate at mid-winter, US corn exports have been on the rise. This past quarter’s overseas shipments of 675 million bu. were the 2nd highest ever vs 1989/90’s 682 million level. However, this year’s US export shipments have a lofty 2.5 billion goal suggesting this year’s weekly shipments need to average 59 million bu. the balance of 2021/22 crop year. Going forward, US export will be determined by the ongoing Black Sea conflict impact on Ukraine’s exports and their 2022 plantings. Brazil’s safrinha corn crop in Mato Grasso needs improved weather during late April’s pollination & May’s filling period to avoid another disappointing crop.

US cattle feedlot inventories have held near last year’s numbers while US hogs numbers remain below last year suggesting this past quarter’s corn feed demand will be lower than last year like last fall. Substitution of other feedgrains and the higher use of ethanol’s distiller’s dry grains in cattle rations are additional factors lessen corn’s direct feed demand. These factors put our 2nd quarter corn feed demand at 1.36 billion bu, down 67 million. Overall, 2022’s March 1 corn stocks could be 200 million bu. larger than last year at 7.895 billion bu. & 2nd smallest in last 5 years.

What’s Ahead:

Thursday’s March stocks provide insights into this year’s corn feed demand. The initial US planting corn area is important. However, the Black Sea conflict’s impact on Ukraine’s old crop exports, their available 2022/23 export supplies & weather’s effect on Brazil’s safrinha corn output all remain price factors ahead of the US growing season.

Keep your 2021/22 sales at 90% & your new crop marketings at 25%.