KANSAS CITY, MISSOURI, US – Coarse grains prices have been mixed in recent months, but maize (corn) has moved higher in the United States and South America, where traders have been keeping a close watch on the weather.

In the World Agricultural Supply and Demand Estimates (WASDE) published on Jan. 12, the US Department of Agriculture (USDA) cut its forecast for global coarse grain production for 2021-22 by 1.6 million tonnes, to 1.5 billion. It now puts US coarse grain production at 398.71 million tonnes, up from its December forecast of 397.95 million.

“This month’s foreign coarse grain outlook is for lower production, consumption, and stocks,” the USDA said. “Foreign corn production is forecast lower with declines for Brazil, Argentina, Kenya, Mexico, the EU, and Paraguay that are partially offset by an increase for Ukraine.”

For Argentina, dryness during December reduced yield prospects for early-planted corn in key central growing areas, although with an increase in late-planted corn area for much of the crop, the critical phase of the growing season lies in the months ahead, the USDA said.

“Brazil is lowered reflecting reduced yield expectations for first-crop corn in southern Brazil,” the USDA said.

In its Jan. 13 Grain Market Report, the International Grains Council (IGC) said its index of maize prices had risen by 4% since its previous report, published in November, “with gains in the US and South America only partially outweighed by a modest decline in Ukraine.”

The nearby US (March) futures contract posted a net increase of 3%.

“Gains initially stemmed from very good ethanol margins and solid processing demand,” the IGC said. “While futures briefly turned lower on broad-based COVID-19-related uncertainty and some concerns about slowing export demand, highlighted by reports of China booking more supplies from Ukraine, sentiment turned increasingly bullish during December.

“Against a backdrop of subsiding worries about the omicron variant, traders’ attention was increasingly focused on worsening drought conditions across parts of South America, seen limiting surpluses in both Brazil and Argentina. With nearby Gulf premiums also boosted by tight spot supplies and rising barge freight rates amid cold Midwest conditions, fob quotations advanced by $17 month-on-month, to $281 fob (Gulf).

“Amid rising threats to production prospects, export prices in Argentina (Up River) rose by a net $19, to $271 fob, with the discount to competing origins narrower compared to mid-November. Due to tight spot availabilities, nearby quotations in Brazil (Paranagua) were highly nominal, seen around $11 higher, at $281 fob. Fob values in Ukraine were underpinned by good export demand but, with traders looking to market a record large crop, values eased by net $5, to $277 fob.”

The IGC’s barley price index was down by 3% since its previous report, “mainly weighed by weakness in other markets, but with some pressure too from reports of bumper Southern Hemisphere crops, especially in Australia. While trade activity was seasonally quiet, reports of fresh export demand provided occasional price support.”

“Mainly linked to a pullback in wheat values, barley export prices in the EU (France) fell by $15 to $299 fob (Rouen), with declines only partly contained by reports of China securing additional feed grade supplies,” the IGC said. “Market activity was especially quiet in the Black Sea region, where nominal values were quoted at $293 fob, down $12.

“Values in Australia retreated on ample new crop supplies, dropping by a net 4% in South Australia to $274 fob (Adelaide) and by $25 in Western Australia to $263 fob (Kwinana). Despite a seasonal increase in availabilities, prices in Argentina rose by $8 to $298 fob (Up River) on underlying strong demand.”