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US corn market focus shifting to weather, supply-side issues

Corn market in the US after being largely maneuvered by Chinese demand in the last few months is now shifting focus to weather conditions in the US and supply side issues, analysts said.

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The 2021-22 (September-August) season's corn crop has just been planted and will be harvested by September-October. During the season's growth, weather remains extremely important in the country; however, traditionally markets become more weather-oriented by July.

"After trading an unseasonal weather market in May, we're trading the same weather market in June," S&P Global Platts Analytics said June 8. The corn market's strength has shifted from being demand based to being supply-based, it added.

Dry weather in parts of the US has remained a concern for farmers and a leading factor for volatility in US corn prices. Dryness concerns were confirmed by Department of Agriculture's crop conditions report on June 6, which showed corn conditions down 4% nationally against an expected 2% drop.

It is dry, and that remains a concern heading into pollination, but there is a somewhat seasonal trend of corn topping out in mid-June as the market readies itself for the all-important acreage report at the end of the month, Platts Analytics said.

The USDA in its June 30 acreage survey report will update US 2021-22 acreage numbers, which will provide an important lead for US corn supply and demand estimates for the year.

Going forward, in the near term, weather is likely to be the key driver for US corn prices, with the important USDA releases providing direction, analysts said.

"Weather will be the primary driver of corn prices in the next four to five weeks, with a caveat of looking to the results of USDA's latest acreage survey on June 30, along with the quarterly stocks report that day," said Arlan Suderman, chief commodities economist with StoneX.

The USDA, as of now, sees US corn production in the 2021-22 marketing year at 14.99 billion bu, compared with 14.18 billion bu estimated for the 2020-21 marketing year. Following previous season's weather disruptions and production estimates that came out lower than what was earlier expected, corn ending stocks for 2020-21 are estimated at 1.352 billion bushels, the lowest after 2013.

Corn futures prices on the Chicago Board Trade, which have remained volatile in the past few sessions, were seen trading at $6.90/bu currently, up 10 cents from the previous close.