- The slow pace of shipments and sales in the US;
- Increase in production estimate for the 2023/24 crop in the US and the 2022/23 crop in Brazil by USDA;
- Concern about river levels in the US and impacts on grain flow.
- Tensions between Russia and Ukraine;
- Rain in the US may limit corn harvest progress;
- Concerns about the weather impacts on the Chinese corn crop.
Last week, corn futures did not show a well-defined trend in Chicago. Despite a lack of major news, December/23 ended the period close to stability, quoted at 477.25 cents/bu last Friday (22), an increase of only 0.2% weekly.
US crop conditions: According to the USDA Crop Progress Report, the harvest in the country had reached 9% by September 17, 2 percentage points above the same week last year and the 5-year average for the same period. Crops classified as good/excellent decreased by 1 point to 51%, which was already expected by the market, as it is historically common to observe a slight decrease in ratings during the harvest period. The weather models indicate rain in the belt throughout the next week, which may result in some harvest delay but does not bring major concerns for the quality of the crops.
River levels in the USA: Fluvial logistics, affected by the lack of rain, continue to bring concerns for grain exports from the US. According to NOAA data, the levels in Memphis were at -2.9 meters on the morning of this Monday (25), 1.4m below the low stage mark. Even with the forecast of rain for next week, it is not expected to provide significant relief for river logistics. The levels in Memphis are expected to continue to decline, reaching around -3.2m by early October.
Chinese imports: The Chinese Customs Department reported that the country imported 1.2 million tonnes of corn in August, a volume 28.6% lower than that recorded in July and 33.3% below what was observed in August 2022. In the first eight months of this year, China imported 14.9 million tonnes of corn, about 2 million less than in 2022.
First estimate from Conab for 2023/24: Last week, Conab released its first estimate for the 2023/24 grain crop. The Company predicts Brazil's total corn production will reach 119.8 million tonnes, below the 131.8 million estimated for 2022/23. The main driver of this decline is the second crop, estimated at 91 million tonnes, 11.2 million less than Conab's number for 2022/23. According to the Company, the drop in cereal prices is expected to discourage the expansion of planted areas in the upcoming crop, which is one of the main reasons for the lower Brazilian supply. The institution estimates that the total area of corn will decrease from 22.3 to 21.2 million hectares, with the second crop being responsible for 820.4 thousand hectares of this reduction. On October 10, Conab will release its 1st survey of the 2023/24 grain crop, bringing its numbers for each state and the complete supply and demand balance.
Black Sea: Ukraine continues to defy Russia, and after the transportation of some ships, the first vessel with a load of grains left a Ukrainian port through the Black Sea since the Grain Agreement expired. The apparent success of the operation was a factor of resistance for the corn market.
Ethanol production in the US: According to data released by the Energy Information Administration (EIA), US ethanol production totaled 980 thousand barrels per day (mbpd) in the week ending September 15, a decrease of 59 mbpd compared to the previous week. Despite the drop, the recorded volume exceeded the one observed in the same week of last year by 79 mbpd and the 5-year average by 18.6 mbpd. On September 15, ethanol stocks had reached 21.68 million barrels, 510,000 less than a week before.
Weekly export sales - US (thousand tonnes)
US export inspections: According to the USDA Export Inspection Report, the US shipped 642.1 thousand tonnes of corn in the week ending September 14, 16.9 thousand tonnes more than the previous week and 92.6 thousand tonnes above the same time in 2022. The accumulated shipments totaled 1.27 million tonnes, 120,000 more than in the same period of the previous season.
US export sales: The net sales for the 2023/24 season totaled 566.9 thousand tonnes in the week ending September 14, 186.4 thousand less than the previous week. Despite the weekly decline, the volume exceeded the one recorded in the same period last year by 384.5 thousand tonnes. In total, the US traded 11.7 million tonnes versus 12.5 million in the same period of the previous season. The season is just beginning, and the observed delay does not necessarily indicate that the country will not reach the currently estimated volume by USDA (52.1 million tonnes). However, it is still a factor that limits the increases in cereal prices. Until mid-September, China had purchased 635.5 thousand tonnes of American corn, compared to 3.4 million in the same period of the previous cycle.
