Chicago maize futures rebounded to USD 236.9/MT, a rise of 10% in the seven days to 2nd June 2021, with concerns over dry weather conditions in the US amid strong demand, boosting prices. Significant aridity in parts of the US Midwest increased market concerns over the newly planted maize crop yields.
Nonetheless, the new USDA Crop Progress report, released on 1st June, rated maize crop condition at 76% good-to-excellent versus market participants estimate of 70%. In addition, planting and emergence remain well ahead of average, with 95% of maize crop planting completed by the week ending 30th May, 8% points above the five-year average. However, with three months to go before harvest in September, the variables could easily change during this period.
This recent concern over the US maize crop comes when prices are relatively sensitive over potential global supply tightness, with Brazil – the second-largest maize exporter – being impacted by severe droughts. Brazil’s worst water crisis in almost a century, according to Reuters, will most likely impact river navigation and make logistics of key commodities difficult and potentially more expensive. According to Brazil’s agribusiness consultancy, the production estimate for 2020/21 was pegged at 73 million tonnes vs USDA’s projection of 102 million tonnes.
Overall, the fundamentals suggest a bullish market for the next couple of months and weather developments will remain a key price driver which needs to be monitored.