Gurgaon, India — The weather forecast appears favorable for growth of late planted US corn, weather and market analysts said, potentially weighing on prices.
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The outlook comes after unfavorable conditions for planting during mid-April to June.
This development could weigh on already subdued prices of the coarse grain, which have been volatile in the last couple of months on the back of weather uncertainties, analysts said.
Expectations of lower production on unfavorable weather had sent corn prices to multi-year highs earlier in the year, but easing weather concerns and increased competition have pulled prices down sharply.
The September corn futures contract on the Chicago Board of Trade closed at $3.5 per bushel Wednesday, down from a five-year high of $4.7/bu in mid-June.
"A number of events have contributed to this selloff; higher planted acres than expected, a higher yield estimate than expected ... the weather has been conducive to the developing crop and weather forecasts have been pretty benign with respect to any prospects of an early frost," Rabo AgriFinance vice president Stephenson Nicholson said.
The US Department of Agriculture in its August World Agriculture Supply and Demand Estimates raised its yield forecast for US corn to 169.5 bushels per acre from 166 bu/acre previously. The USDA's corn acreage for the marketing year 2019-2020 (September-August) is also higher than market expectations at 90 million acres.
FROST CONCERNS FADE
The delayed corn and soybean planting in the US this year raised concerns of frost damage in the autumn. If an early or normal frost occurred across the Corn Belt, it would likely lead to significant damage, reducing yields, Maxar senior meteorologist Kyle Tapley said.
"However, the outlook for the next 15 days shows no potential for frost across the Corn Belt and it appears that a later than normal frost is likely this year, which should limit crop damage," he said.
The forecast shows above normal temperatures for most of the Corn Belt, limiting the threat of frost, Tapley said.
Dry weather in Iowa is leading to some stress on the corn crop, but increased rainfall next week should increase soil moisture and reduce crop stress, he said.
According to the crop progress report released by the USDA, 89% of corn was in the dough stage as of Sunday, compared with 99% a year before, and only 11% corn had reached maturity versus 33% a year previously.
This could delay the harvest by two to three weeks, sources said.
Corn harvest has begun in fringe areas. It should start in the core Midwest in mid-to-late September, reaching its peak by mid-October, Illinois-based farmer Steve Pitstick said. The corn harvest in the US Midwest -- the country's largest producing region -- normally starts by late August.
Adding to the easing weather concerns, higher supplies from Brazil and Argentina and low exports from the US are also weighing on US corn prices.
Brazil and Argentina are expected to harvest a record crop of 101 million mt and 51 million mt in March 2019 to February 2020, respectively, according to USDA's estimates.
"US corn commitments for the 2019-20 marketing year that started September 1, are running at their lowest level since 2005-06," Futures International senior commodity analyst Terry Reilly said. "We are seeing slow US export commitments from major importing countries like Japan and South Korea."
"Fresh contract low for December corn of $3.53/bu on Sep 6 was not a surprise to us," Reilly said. "We would not rule out $3.40/bu if US exports remain lackluster through November."
The most active December contract closed at $3.61/bu on Wednesday.
-- Shikha Singh, email@example.com
-- Edited by James Burgess, firstname.lastname@example.org