Global Feed Grain Market: The market has priced in the reduction of corn production in Europe and the United States, and the price of feed grain has risen slightly

 

December 2022 corn futures on the Chicago Board of Trade (CBOT) closed at $6.
6575 per bush on Friday, up 0.
23% from a week ago
.
The spot price of US Gulf No.
2 yellow corn for the October shipment was US$7.
6475 per bush, up 0.
1% from a week ago; the November 2022 corn futures on the EURONEXT exchange closed at 316.
25 euros / ton, up 0.
1% from a week ago
.
The FOB offer price of Argentine corn in Shanghe was $288/ton, up 1.
4% from a week ago
.
November 2022 corn futures on the Dalian Commodity Exchange closed at around 2,767 yuan/ton on Friday, up 1.
4% from a week ago
.

 

International crude oil futures fell sharply this week on concerns about global economic growth and slowing energy demand
.
The October West Texas Intermediate (WTI) contract on the New York Mercantile Exchange (NYMEX) settled at $86.
87 a barrel, down 6.
7% from a week earlier
.
November Brent crude futures, the global benchmark, were at $93.
02 a barrel, down 7.
9% from a week earlier
.
The ICE U.
S.
Dollar Index closed at 109.
51 on Friday, up 0.
7% from a week earlier
.

 

U.
S.
corn crop ratings continue to decline

 

After the market closed last Friday, the survey results released by ProFarmer showed that this year's average corn yield in the United States was 168.
1 bushels per acre, and the corn yield was 13.
759 billion bushels, the lowest yield since 2019 and lower than the United States.
USDA's August forecast of 175.
4 bushels/acre and 14.
359 billion bushels
.

 

　　This week South American crop expert Dr.
Michael Cordogne lowered the 2022 U.
S.
corn yield by 3 bushels to 170 bushels per acre
.
He said U.
S.
corn conditions continued to decline, with continued dryness in parts of the Western Corn Belt, recent crop inspections confirming lower yields, and possible harvest delays in the South due to rainy weather
.
In addition, last week's Midwest expedition did not survey some of the worst drought-affected states, such as Kansas, Texas, Missouri, Kentucky, Tennessee and North Carolina
.

 

　　The U.
S.
Department of Agriculture's weekly crop progress report released after the market closed on Monday showed that as of Aug.
28, 54 percent of U.
S.
corn was good to good, compared with 55 percent a week earlier and 60 percent a year earlier
.
Before the report, analysts expected crop ratings to remain stable
.
The U.
S.
corn maturity rate is 8%, compared to 8% a year earlier and the five-year average of 9%
.

 

　　European corn production forecast lowered

 

　　Global food prices fell for a fifth straight month in August to 138 points, down 1.
9% month-on-month, but still 7.
9% higher than a year earlier, the UN Food and Agriculture Organization (FAO) said on Friday
.
The Coarse Grains Price Index edged up 0.
2 percent in August from July, as hot and dry weather in the European Union and the United States boosted corn prices
.

 

　　FAO estimates that global cereal production in 2022 will be 2.
774 billion tons, down 17.
2 million tons from the previous month's forecast, and 38.
9 million tons or 1.
4% lower than the previous year, mainly because the estimated global coarse grain production is down 17.
9 million tons to 14.
83 100 million tons, a decrease of 1.
8% over the previous year
.
Most of the decline this month has been concentrated in EU corn production
.
Due to the unusually hot and dry weather in Europe since late spring, the FAO forecast this month that the EU corn yield is 16% lower than the five-year average
.
At the same time, the FAO also lowered its forecast for U.
S.
corn production, as unfavorable weather in the Midwest lowered yield prospects
.

 

　　On August 30, the French consulting firm Agritel released a report saying that the French corn harvest may be "catastrophic", and the output may only be 10.
8 million tons, the lowest value in this century
.
Agritel forecasts EU corn production this year at just 53.
8 million tonnes, the lowest in 15 years
.

 

　　La Niña weather could hit for third straight year

 

　　On August 31, the World Meteorological Organization predicted that the La Niña weather pattern will continue at least until the end of this year, making it the first time this century that La Niña has occurred in three consecutive northern hemisphere winters
.
This Polanina started in September 2020
.
The odds of persisting in September-November 2022 reach 70%, reducing to 55% in December-February 2022-2023
.

 

　　La Niña refers to cooler ocean surface water temperatures, which typically have the opposite effect on weather and climate than El Niño
.
El Niño refers to the warming phase of the Enso Southern Oscillation (ENSO)
.

 

　　U.
S.
ethanol production was lower than expected last week, and the U.
S.
may introduce favorable ethanol policies by the end of the year

 

　　The U.
S.
Energy Information Administration said U.
S.
ethanol inventories totaled 23.
53 million barrels in the week ended Aug.
26, about 300,000 barrels less than last week and also below analysts' expectations
.
Analysts polled by Dow Jones forecast inventories of between 23.
7 million barrels and 24 million barrels
.
U.
S.
ethanol production last week was 970,000 barrels per day, the lowest output since April
.

 

　　Media reports on Friday said the U.
S.
Environmental Protection Agency (EPA) may announce mandatory biofuel blending targets for the next three years in November, rather than just one year as before
.
This helps reduce industry uncertainty and is welcomed by the U.
S.
biofuel industry as well as Midwest corn farmers
.

 

　　European gas crisis intensifies, fertilizer supply at risk

 

　　European gas has surged again recently, as Russian gas supplies to Europe have been slashed
.
European gas prices have risen by nearly 400% over the past year, and by nearly 40% in August alone
.
Globally, natural gas is used as a feedstock and fuel for nitrogen fertilizer production
.
According to fertilizer giant Yara, 80 percent of natural gas is used as a raw material for fertilizer production, and 20 percent is used for heating processes and power generation
.
More fertilizer companies are closing as gas prices in Europe soar, leading to concerns about future fertilizer supplies
.
Yara said on August 25 that record natural gas prices in Europe are affecting synthetic ammonia production profits, and the company will cut production again
.
After the latest cuts, the company's European ammonia production capacity will be only around 35% utilised
.
Yara is one of several European chemical companies to cut ammonia production this year
.
Earlier, Germany's SKW Piesteritz and BASF (BASF) also cut ammonia production
.
Grupa Azoty, Poland's largest chemical company, said on Aug.
24 that it would limit fertilizer production because of an unusual and unprecedented rise in natural gas prices
.
CF Fertilizers said on the same day that its Billingham Complex would temporarily stop ammonia production due to high gas and carbon prices
.
Analysts pointed out that although European farmers can import fertilizers from outside Europe, the price will be more expensive
.
The future is not optimistic, posing challenges to both food production and food security
.
The impact, both in the short and long term, is higher food prices
.
Corn is a highly fertilizer-intensive crop
.

 

　　U.
S.
corn acreage may increase in 2023

 

　　Private agencies predict U.
S.
farmers will plant more corn in 2023
.
U.
S.
farmers will plant 94.
3 million acres of corn next spring, according to a Farm Futures survey
.
If realized, it would be the largest acreage in 10 years; assuming yields also reach trend levels, it would mean an 8% increase in U.
S.
corn production next year
.

 

　　Upbeat outlook for Brazil's corn crop next year

 

　　In South America, Brazil's National Commodities Corporation (CONAB) expects corn acreage to rise 2.
5% year over year to 55 million acres next season
.
Corn production will reach a record 125 million tons, up 9.
4% year-on-year
.
High global corn prices will encourage Brazilian farmers to expand corn acreage despite higher production costs
.
In Mato Grosso, the top corn-producing state, corn net profit margins in 2022/23 are expected to be 7 percent, down from 9 percent the previous year, with higher fertilizer prices being one of the main factors behind higher production costs
.
CONAB expects average corn yields in 2022/23 to increase by 6% year-on-year
.

 

　　Brazil is the world's third-largest corn producer and exporter, after the United States and China
.
Brazil is also working to expand ethanol capacity, with 17 corn ethanol plants currently in operation, including 10 in Mato Grosso and five in Goias
.
CONAB forecasts Brazilian corn exports to be 44.
5 million tons in 2022/2023, up 19 percent from the current season's forecast of 37.
5 million tons
.

 

　　Brazil corn exports surge 74% in August

 

　　According to official statistics released by the Secretariat of Foreign Trade of Brazil (SECEX) on September 1, Brazil's corn exports in August were 7.
5 million tons, up from 4.
1 million tons in July and 74% higher than the 4.
3 million tons in the same period last year.
This reflects the recovery of Brazil's corn production this year
.

 

　　It was reported last week that some European buyers may wash their previously ordered cargoes of Brazilian corn due to cheaper Ukrainian corn
.

 

　　Ukraine's corn exports for the 2022/23 season (starting on July 1) were about 2.
6 million tonnes as of September 2, up from 1.
27 million tonnes a year earlier, Ukrainian customs data showed
.