BMF Cash Corn Nov '21 (XEX21)
|Contract||Cash Settled Corn|
|Tick Size||BRL 0.01 cent per 60-net kilograms (BRL 4.50 per contract)|
|Daily Limit||Consult Exchange|
|Contract Size||27 metric tons or 450 bags of 60 kilograms each of corn in bulk|
|Months||Jan, Mar, May, Jul, Aug, Sep, Nov (F, H, K, N, Q, U, X)|
|Trading Hours||9:00a.m. - 15:30p.m. (15:50p.m. - 6:00p.m. after hours T+1)|
|Value of One Futures Unit||BRL 450|
|Value of One Options Unit||BRL 450|
|Last Trading Day||The fifteenth business day of the delivery month|
Corn is a member of the grass family of plants and is a native grain of the American continents. Fossils of corn pollen that are over 80,000 years old have been found in lake sediment under Mexico City. Archaeological discoveries show that cultivated corn existed in the southwestern U.S. for at least 3,000 years, indicating that the indigenous people of the region cultivated corn as a food crop long before the Europeans reached the New World. Corn is a hardy plant that grows in many different areas of the world. It can grow at altitudes as low as sea level and as high as 12,000 feet in the South American Andes Mountains. Corn can also grow in tropical climates that receive up to 400 inches of rainfall per year, or in areas that receive only 12 inches of rainfall per year. Corn is used primarily as livestock feed in the United States and the rest of the world. Other uses for corn are alcohol additives for gasoline, adhesives, corn oil for cooking and margarine, sweeteners, and as food for humans. Corn is the largest crop in the U.S., both in terms of dollar value and the number of acres planted.
The largest futures market for corn is at the CME Group. Corn futures also trade at the Bolsa de Mercadorias & Futuros (BM&F) in Brazil, the Budapest Commodity Exchange, the Marche a Terme International de France (MATIF), the Mercado a Termino de Buenos Aires in Argentina, the Kanmon Commodity Exchange (KCE) in Korea, and the Tokyo Grain Exchange (TGE). The CME futures contract calls for the delivery of 5000 bushels of No. 2 yellow corn at par contract price, No. 1 yellow at 1-1/2 cents per bushel over the contract price, or No. 3 yellow at 1-1/2 cents per bushel below the contract price.
Prices - CME corn futures prices (Barchart.com electronic symbol code ZC) trended lower the first half of 2019 and posted a 1-1/2 year low of $3.3550 per bushel in May. Robust global corn supplies pressured corn prices the first half of 2019. In March, Conab hiked its Brazil 2018/19 corn production estimate to 92.8 million metric tons (MMT), up +15% yr/yr. Brazil is the world's second-largest corn exporter. Also, 2018/19 corn production in Argentina, the world's third-largest corn exporter, surged +51% yr/yr to a record 48 MMT. The U.S./China trade war in 2019 prompted U.S. farmers to cut their soybean planted acreage and boost their corn acreage as the USDA in March forecast a +4.2% increase in U.S. 2019 corn acreage to 92.8 mln acres. The trade war also curbed U.S. exports and increased supplies as the USDA in May raised its U.S. 2019/20 corn ending stocks estimate to a 32-year high of 2.485 billion bushels, up +18.6% yr/yr, and boosted the U.S. corn stocks-to-use ratio to a 14-year high. Corn prices then rebounded sharply into mid-June and posted a 5-1/2 year high of $4.6425 a bushel. A cold, wet spring in the U.S. delayed corn plantings to their slowest pace since records began in 1980. NOAA reported that the May 2018 through April 2019 period was the wettest 12-month period in the contiguous U.S. since data began in 1895. The delay in corn plantings prompted the USDA in June to cut its U.S. 2019/20 corn production estimate to a 4-year low of 13.68 billion bushels from a May estimate of 15.03 billion bushels. Corn prices then fell sharply by more than $1.20 a bushel into September on reduced supply concerns. Conab raised its Brazil 2018/19 corn production estimate in July to a record 98.5 MMT, up +22% y/y. Also, the USDA in September unexpectedly raised its U.S. 2019/20 corn ending stocks estimate to 2.190 billion bushels, and in October the USDA forecast U.S. 2019/20 corn production at 13.799 billion bushels and cut its U.S. 2019/20 corn export estimate to a 5-year low of 1.9 billion bushels. Corn prices then ratcheted higher into year-end on trade optimism after the U.S. and China in December 2019 agreed to a phase-one trade deal. Corn prices finished 2019 little changed, up +0.3% yr/yr at $3.8775 a bushel.
Supply - World production of corn in the 2019/20 marketing year is forecasted to fall -1.0% yr/yr to 1.111 billion metric tons, below the 2016/17 record high of 1.122 billion. The world's largest corn producers are forecasted to be the U.S. with 31.3% of world production, China with 23.5%, and Brazil with 9.1%. Production in both China and Brazil has more than tripled since 1980. Production in the U.S. over that same time frame has roughly doubled. The world area harvested with corn in 2019/20 is forecasted to rise +1.3% yr/yr to 331.9 million hectares. World ending stocks of corn and coarse grains in 2019/20 are forecasted to fall -5.6% yr/yr to 327.7 million metric tons.
U.S. corn production for the 2019/20 marketing year (Sep-Aug) is forecasted to fall -5.1% yr/yr to 13.692 billion bushels. U.S. farmers are forecasted to harvest 81.482 million acres of corn for grain usage in 2019/20, which is down -0.3% yr/y. The U.S. corn yield in 2019/20 is forecasted to fall -5.3% yr/yr to 167.0 bushels per acre, down from the previous year's record high. U.S. 2018/19 ending stocks rose +3.75% yr/yr to 2.221 billion bushels. The largest corn-producing states in the U.S. in 2019 were Iowa with 18.4% of U.S. production, Nebraska with 13.0%, Illinois with 12.4%, Minnesota with 9.1%, and Indiana with 5.9%.
Demand - World consumption of course grains in the 2019/20 crop year is expected to rise +0.2% yr/yr to 1.421 billion metric tons, a record high. The largest category of usage in 2019/20, aside from animal feed, will be for ethanol production (alcohol fuel) with 5.450 billion bushels, which is 79.2% of total non-feed usage. That was up +1.4% yr/yr. After ethanol, the largest non-feed usage categories are for high fructose corn syrup (HFCS) with 6.4% of U.S. usage, glucose and dextrose sugars with 5.2%, corn starch with 3.4%, cereal and other corn products with 3.1%, and alcoholic beverages with 2.2%.
Trade - U.S. exports of corn in 2019/20 are expected to fall -14.0% yr/yr to 45.087 million metric tons. Brazil's corn exports in 2019/20 are expected to fall -14.3% yr/yr to 36.000 million metric tons. Argentina's corn exports are expected to fall -6.9% yr/yr to 33.500 million metric tons.
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