- More positive USDA estimates for Ukrainian exports;
- Good volume of rainfall recently recorded in grain-producing regions of Brazil and Argentina;
- Drop in wheat futures in Chicago.
- Good volumes of shipments and export sales from the US;
- Despite registering a more favorable weather pattern, concern about weather conditions in South America persists.
After two consecutive weeks in the positive field, corn futures fell again in the weekly comparison. The March 2024 contract ended last Friday (December 15) at 483 cents/bu, a 0.5% decline compared to the previous week.
Corn ethanol supply in the US: According to the latest Energy Information Administration (EIA) data, US ethanol production totaled 1,074 thousand barrels per day (tbpd) in the week ending Dec. 8, a slight weekly contraction of 2 tbpd. On the other hand, production in this last week exceeded the 5-year average for the same period by 22.6 mbpd. On the stocks side, what was observed was a hike in their volume to 22.1 million barrels, an increase of 661 thousand barrels.
US export inspections: After the excellent performance shown by American shipments in the week ending November 30 (1.2 mmt of corn), the volume recorded in the week ending December 7 returned to average levels (711.7 tmt), according to USDA data. In the year-on-year comparison, the volume observed in the first week of December exceeded the one recorded in the equivalent period of 2022 by 194.3 tmt, which allowed for the hike in the surplus of shipments accumulated in 2023/24 compared to the same period of the previous season, to 2 million tonnes. That is, as of December 7, the accumulated shipments of the 2023/24 season totaled 9.2 million tonnes, while in the same interval of 2022/23, exports reached 7.2 million tonnes.
US export sales: The USDA reported in its weekly US export sales report that the North American country negotiated 1.42 mmt in the week ending on December 7, about 130 TMT more than a week before, a volume within the market's expectations range, which varied between 800 TMT and 1.6 MMT. In the annual comparison, sales showed a hike of 460 tmt, increasing the difference between the accumulated sales in the 2023/24 season and the previous season. The accumulated sales total 27.2 million tonnes, 7.16 million more than the previous crop's same interval.
Export sales per week - USA (tmt)
Wheat futures fall again in Chicago: After two weeks marked by high increases in wheat futures, with March/24 of grain advancing 4.4% in the week of December 1 and 4.8% in the week of the 8, the grain prices fell again last week. The March 24 wheat closed Friday (Dec 15) at 629.25 cents/bu, a 0.4% contraction for the week. The USDA's announcement of wheat sales to China during the first week of this month was one of the major support factors for its futures in Chicago, an element that also supported corn contracts. Nonetheless, with the conclusion of this buying campaign by the Asian giant, wheat lost support last week.
Contrary to what was seen in Chicago, corn futures registered sharp appreciations on the B3, the third consecutive one in the weekly comparison. January 24 ended last Friday (15) at BRL 73.29/bag, an appreciation of 2.6% for the week.
Conditions in Brazil: The first two weeks of December were marked by irregular rains. Despite the record of rainfall in the last few weeks, at least in the northern part of the Brazilian grain belt, it did not occur as expected. Despite concerns about excessive rainfall in the Southern states, reports indicate good crop conditions for the cereal. To provide better monitoring of crops, risk management consultants from StoneX have prepared comments on the situation of soybeans and corn in Brazil and Paraguay. Click here to access the full report. The weather will continue to be in the spotlight, and weather models do not indicate the occurrence of high rainfall in much of the producing regions in the Midwest and North/Northeast. It will be essential to monitor whether or not the predictions are implemented.
Planting in Brazil: According to the Crop Progress Report for Brazil conducted by StoneX, planting the first corn crop continues to be behind schedule, reaching 79.2% at the end of last week, compared to 92.7% in the same period last year. The soybean planting reached 93.3%, compared to 96.4% in the same period last year. Click here to access the full report.
Argentine crop condition: According to data from the BCBA, 49.3% (or 3.5 million hectares) of the estimated 7.1 million hectares have already been planted. The nine-percentage point increase was made possible by favorable soil moisture conditions. In addition, abundant rainfall contributed to improving crop conditions in the country. 40% of the crops are in good/excellent condition, 4 points higher than a week ago and 22 points above the same period last year.
Argentine government must increase grain export tax: The new Argentine government has shown interest in increasing taxes on corn and wheat exports from 12% to 15%, while soybean taxes would be kept at 33%. Another important political measure was the significant devaluation of the peso. The official exchange rate went from approximately 365 pesos/USD to around 800 pesos. Furthermore, inflation remains extremely high in the country, and amidst the high uncertainty surrounding the producer, they are expected to continue to hold back the sales pace.
