- Growth prospect of supply in South America;
- US exports in 23/24 are below the 5-year average;
- USDA projects an increase in US ending stocks for 24/25.
- USDA projects a reduction in corn acreage in the US in 24/25;
- Funds are closing out their short positions;
- Russian attacks may impact Ukrainian exports.
Last week, corn quotes in Chicago gave back the gains recorded after the planting intentions report, released on 28/03, which led to a lower closing of the period, even with highs in some sessions. The May contract ended Friday (04/05) at 434.25 cents per bushel, a weekly decrease of 1.8%.
Regarding the planting intention data, which brought a corn acreage below expectations at 36.4 million hectares, the market seems to have considered at least two factors. First, the combined area of soybeans and corn decreased, as the soybean figure came in line with expectations, which could signal that a larger area of corn could still be planted, with the figures being updated by the USDA at the end of June. Moreover, the survey of planting intentions is less extensive than that carried out by the USDA for the acreage data, which will be updated after three months when the crop is planted. Thus, there is still room for changes on the part of the producer compared to what was determined by the planting intentions.
In any case, it is worth noting that, even with this smaller area than expected, if productivity remains in line with the projected trend, the supply and demand balance for corn in the US would still document a comfortable situation, taking into account the estimated demand variables in the Agricultural Forum. Nonetheless, a lot can still happen regarding crop yield, highlighting the possibility of La Niña and the planting pace since corn planted earlier in the US typically performs better and faces fewer risks.
Intraday (15 min) May/24 contract - CBOT
Exports are still on the radar in the USA. Currently, Brazilian corn is competitive, but exports originating from Brazil are very weak, which seasonally is not a surprise as shipments are concentrated in the second half of the year, after the safrinha harvest.
Even so, it is worth noting that there are concerns about the level of Chinese imports, with rumors that the country would be well stocked, remembering that the 23/24 crop was very positive, even with the floods recorded in the middle of last year, which affected agricultural areas of China. Chinese purchases of American soybeans from the 23/24 crop are 6.1 million tonnes weaker than in the same period last year. Still, other destinations are more than making up for the lower Chinese purchases.
US export sales in the week ended 03/28 reached 948 thousand tonnes, a volume within the range of estimates, which ranged from 800 thousand to 1.4 million tonnes.
Export sales from the United States (tmt)
Source: USDA. Design: StoneX.
In South America, the Buenos Aires Exchange updated its estimate for Argentina's 23/24 corn production, bringing another reduction of 2 million tonnes, now betting on 52 million. The institution highlighted an 8 p.p. reduction in crops in normal/excellent conditions in the week ending on 04/03, amid the incidence of illnesses/pests, especially the leafhopper. The cereal harvest in the country is 11.1% complete, a weekly advance of 5.4 p.p.
In Brazil, with the safrinha planting nearing completion, having reached 98.8% of the total area on Friday (05), according to StoneX, the weather is on the radar, with rains being very important in April to ensure good development of the crops. The forecasts indicate good precipitation levels in much of the country for the next two weeks, which, if confirmed, would be beneficial.
Corn quotes on B3 oscillated and ended last week lower, with the May contract at R$ 58.88 per 60 kg bag. There was no major news in the domestic market, with the weather for the "safrinha" being monitored, as highlighted in the previous paragraph. Furthermore, the Chicago Exchange did not sustain the gains after the planting intentions report, which added a more bearish tone to the market.
Intraday (15 min) May/24 contract - B3
The monthly reports from USDA and Conab, always eagerly anticipated by the market, will be released this week. It is worth noting that the USDA will not release the crop 24/25 figures yet, and there should be no major surprises, with some changes for the South American crop possibly occurring. Conab can also bring important revisions to the Brazilian crop as the cycle is more advanced.
Future and spot prices
Futures contracts traded on the CBOT (US¢/bu)
Future contracts traded on B3 (BRL/bag)
Spot prices in Brazil (BRL/bag)
