Grains - Grain Products

Corn: between the flanks of the crude oil and meat markets

April 15, 2020 2:43 PM, Der AUDITOR
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PARIS. The corn market is currently experiencing a test of strength, the market has been caught in the flanks of a drop in the price of crude oil as yet unheard of and, in addition, a slump in meat consumption in North America and China as a result of the Covid-19 pandemic, which is reducing demand for animal feed. Another topic is the progress of corn sowing this year.

In Chicago, corn was 1.9% lower than yesterday at USD 3.25 per bushel and in Paris at EUR 162.50 per mt, down 0.8 %. A 9.3% drop in the price of WTI crude oil to USD 20.5 per barrel also put pressure on corn in Chicago. The reason for this was the weak positioning of the OPEC Plus Group, which, in view of a 30 to 35 million barrel per day slump in global crude oil demand, only wants to withdraw just under 15 million barrels of production output per day from the market. The corresponding demand for ethanol will not improve in the short term because people hardly drive at all due to the coronavirus, said US broker Jack Scoville of PRICE Futures Group. At the same time, more and more US ethanol plants are closing or shortening production times. That means much less corn demand in the US, a third of the US corn demand goes into ethanol production. According to Rabobank, meat consumption in the USA and Canada fell by 30% in March. In the USA, due to the Covid-19 pandemic, rows of slaughterhouses are closing down, especially Smithfield Foods. As a result of African swine fever, the US meat industry had expanded production considerably in anticipation of China's increasing purchases. However, the introduction of quarantines, first in China and then in the US, significantly reduced the demand for pork in both countries, which had a negative impact on demand for animal feed.

Corn, daily price development

Parity

EUR/mt

Diff. EUR/mt

Bordeaux, FOB

159.00

-2.00

La Pallice, FOB

159.00

-2.00

Netherlands, CIF

183.00

0.00

Oldenburg, DDP

190.00

0.00

Brake, FOT

183.00

0.00

Lower Rhine Region, DDP

182.00

0.00

Upper Rhine Region, FOB

180.00

0.00

Ukraine, FOB

-

-

Trade sources

Corn sowing progresses well due to dry weather
The National Pork Producers Council, representing US pig farmers, called on the Trump government to buy up over USD 1 billion worth of pork, the industry expects losses of USD 5 billion this year after the coronavirus severely disrupted demand. In the USA, prices for slaughter pigs had fallen by 9.6% compared to last week. Brazil's first corn harvest was 72% complete, with 3% progress on last year, and the Safrinha sowing was 99% complete. Corn sowing has begun in Western Europe and on the Black Sea. In France, 4% of the planned corn area had already been drilled due to dry weather, and sowing has begun on the Upper Rhine. In the Ukraine, 5.3% of the 5.4 million ha of corn acreage, which was 10.2% larger than last year, were planted. In Russia, 16.7% of corn and summer cereals are said to have been sown. In the Ukraine, export corn last cost USD 159.55 per metric tonne FCA Odessa.

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