- Favorable prospects for Brazilian production;
- Weakened pace of US sales and cancelled shipments to China;
- Favorable prospects for US production.
- Poor conditions for the Argentine corn crop.
- Weather models point to low rainfall in most of the corn producing regions in Brazil;
- Weather models point to drier weather in the US Midwest.
The US pace of shipments improved, but the deficit compared to last season increased again. According to data from the USDA Export Inspection Report, the US shipped 1.323 million tonnes in the week ended May 18, which was 149,300 tonnes more than a week before, but 429,300 less than in the same period of last year. Exports were close to the upper limit of market expectations, which varied between 700,000 and 1.425 million tonnes. Accumulated shipments in the 2022/23 season totaled 27.4 million tonnes, 13.5 million less than in the same period of the previous cycle.
Corn planting in the US continues to show an above-average pace. On May 22, the USDA released its crop progress report. The Department reported that corn planting in the US reached 81% up to May 21, a weekly rise of 16 percentage points, 12 points above one year before (69%) and 6 points above the five-year average for the same period (75%). Overall, progress in the US core states has been at a good pace. The market still has some concerns about seeding progress in the Plains, especially North Dakota. However, the expectation that the country will have a bumper crop still prevails.
Midwest drought concerns support prices. According to NOAA's Drought Monitor, parts of the US Midwest are experiencing an above-normal drought pattern. Weather models indicate that most of the region will experience above-average temperatures and below-average rainfall over the next two weeks, which would favor planting completion, but which raises some questions about productivity. As much as the scenario so far points to a good US crop, we are entering a crucial period for the US corn crop productivity and, therefore, we should see significant price changes, as speculations related to the weather and to crop yields should gain strength.
Ethanol production shows stability in the weekly comparison. According to data released by the Energy Information Administration (EIA), US ethanol production dropped to 983,000 barrels per day in the week between May 13 and 19, a slight decrease of 4,000 barrels/day in the weekly comparison. Production exceeded the five-year average for the same period by 25,600 barrels. Ethanol stocks, on the other hand, had a more expressive retreat, to 22.04 million barrels, 1.150 million less than a week before.
US records net cancellations again. In its Export Sales Report, the USDA reported that US net sales totaled -75,200 tonnes in the week ended May 18. This means that the number of cancellations in the period exceeded the number of sales. In the last four weeks, the country has seen net cancellations three times. The main reason for this result was again China, which registered net cancellations of 331,600 tonnes. In the last five weeks, the Asian giant recorded net cancellations four times. Due to the cancellations, cumulative sales to all destinations dropped to 38 million tonnes, expanding the deficit compared to the 2021/22 season to 21.1 million, against 20.8 million a week earlier.
Argentine crop conditions register a slight improvement. The Buenos Aires exchange reported that 5% of Argentina's corn crops were in good/excellent condition on May 25, a weekly increase of 1 point, but 11 points below the same week of 2022. The corn harvest in the country reached 26.6%, 3.5 points below the level seen a year earlier and 9.9 points below the five-year average. The BCBA continues to estimate the Argentine harvest at 36 million tonnes, 16 million less than in the 2021/22 cycle.
