- Slow pace of US shipments and sales;
- Record of good rainfall in the first two weeks of August in the Corn Belt;
- Expectation of a more comfortable balance sheet in the US in 2023/24
- Forecast of hot and dry weather at the end of August;
- Worsening tensions between Russia and Ukraine;
- I fear the climate impacts on China's corn crop.
Corn futures ended the second week in a row lower. September/23 ended last Friday, September 1, quoted at 464.75 cents/bu, a decrease of 1.3% in the weekly comparison. The December/23, the most liquid contract currently, also registered a fall of 1.3% for the week, reaching 481.5 cents/bu.
American crop conditions: According to the USDA crop follow-up report, 56% of corn crops were rated as good/excellent (G/E) on Aug. 27, down two percentage points from a week earlier but up 2 points from the same period in 2022. Despite the drop, the deterioration was lower than expected by the market. The US crop is advancing at a normal pace. About 9% of the crop is mature, one percentage point above the 5-year average, and 51% has reached the denting stage, 2 points above average. Forecasts show a hot, dry pattern next week. The dry climate worries not only crops but also US logistics. Below-average rainfall in July and August in the Mississippi Valley led to low river levels, the main outlet for production to ports in the country.
Ethanol production in the US: According to data released by the Energy Information Administration (EIA), US ethanol production totaled 1,007 thousand barrels per day (tbpd) in the week ended August 25, down 41 tbpd weekly. On the other hand, the volume surpassed that recorded in the same week last year by 24.2 tbpd and the 5-year average by 37 tbpd. As of Aug. 25, ethanol stocks had reached 21.61 million barrels, 1.2 million fewer than a week earlier and 610,000 barrels less than the 5-year average for the same period.
US Export Inspections: According to the USDA Export Inspection Report, the US shipped 597,100 tonnes of corn in the week ended Aug. 24, 86,600 tonnes more than a week earlier, but 102,700 fewer than at the same time in 2022. Cumulative exports in the 2022/23 season totaled 36.8 million tonnes, 17.8 million tonnes lower than in the same period of 2021/22.
Weekly export sales - USA (thousand tonnes)
US Export Sales: 2022/23 net sales were 71,700 tonnes for the week ended August 24. In the same week last year, there had been net cancellations of 16,400 tonnes and, with this, the delay compared to last season decreases but remains high. Commitments for all destinations came in at 40.6 million tonnes, 700,000 tonnes below the USDA estimate for the 2022/23 season and 20.3 million tonnes less than in the same period in 2021/22.
Climate in China: The Northeast region of China will face wetter and colder than normal weather in the coming days. Last week, it was reported that grain filling progressed more slowly due to weather conditions. Parts of Heilongjiang, Jilin and Liaoning, which account for about 30 percent of China's corn supply, had considerably higher rainfall than normal for this season. Quantifying the effects on crops is still difficult, but keeping track of potential crop delays and impacts on productivity will be important.
Black Sea: Ukraine successfully transported a ship through the special maritime corridor last week. The vessel carried steel, demonstrating that similar operations can be carried out successfully. On Monday, September 4, Turkish President Recep Tayyip Erdogan will meet with Russian leader Vladimir Putin to discuss the Black Sea grain export deal. However, hours before the meeting, Russian drones attacked Ukrainian structures in the Odesa port area, raising questions about the possibility of an agreement between the two countries.
Brazilian production: StoneX lowered its production estimate for the 2023/24 summer corn crop by 1.5% from its August figure to 28.2 million tonnes. On the other hand, the 2022/23 winter crop cycle was again raised to 109.1 million tonnes. There was no change in the numbers for the 3rd crop. Therefore, the total production of corn in 2022/23 advanced to 139.99 million tonnes.
This week, on Wednesday, Sept. 6, StoneX will release its new survey on US soybean and corn crops. In its first release, the average yield was estimated at 11.11 tonne/ha for the 2023/24 US corn crop, which resulted in production at 389.13 million tonnes.
