Surprise cut from USDA catches market on the hop

Surprise cut from USDA catches market on the hop

Cropping
Aa

International corn prices gained up to 10 per cent for the week on the back of a big cut in US planted hectares.

Aa
Corn prices rose 10pc this week.

Corn prices rose 10pc this week.

INTERNATIONAL corn futures rose to three month highs after the US Department of Agriculture (USDA) made shock adjustments to its American corn plantings.

The upward momentum also dragged wheat prices up, with gains on Australian new crop bids generally in order of around $5 a tonne with values around $280-90 a tonne.

Central to the rally was a shock cut of 5.1 per cent in American plantings, down to 36.8 million hectares.

While still a large crop it is significantly smaller than the last USDA update, where the crop was flagged at a whopping 38.8m ha, which was a big driver behind early estimates of the US growing its biggest corn crop ever.

Corn prices, which have been in the doldrums this year due primarily to a lack of demand from the ethanol sector, in turn hit hard by the lack of travel during the COVID-19 pandemic, spiked an amazing 10 per cent during this week's rally.

Commonwealth Bank commodity analyst Tobin Gorey said the USDA decision had taken the global coarse gain balance sheet from very comfortable back to decidedly neutral.

"From a low, perhaps very low, price starting point that alone ensures a rally," Mr Gorey said.

Along with the planting cuts, Mr Gorey said the rally was being aided by weather in the US corn belt, which has included some overly hot conditions.

Mr Gorey said it was still likely to be a record crop, but said the market had factored that in already and any losses in terms of abandoned hectares or lower yields would impact supply and demand.

He also pointed to more purchases from nations such as China as a supportive factor for pricing.

Rabobank also believed the news was firmly bullish for grain prices, saying the revised USDA figure was below trade expectations of around 37.1m ha.

The bank also said the news was good for wheat, with lower winter and spring wheat plantings in the US at 17.7m ha.

The story Surprise cut from USDA catches market on the hop first appeared on Farm Online.

Aa

From the front page

Sponsored by