- Prospects for Argentine production remain positive;
- US exports in 23/24 are below the 5-year average;
- USDA projects an increase in US ending stocks for 24/25.
- USDA reduced estimate for global production and ending stocks in 23/24;
- USDA projects a reduction in corn acreage in the US in 24/25.
United States
Corn appreciated on the Chicago exchange - For the second consecutive week, corn futures appreciated on the Chicago exchange, contrasting the losses occurring since October last year. The May 2024 contract ended at 439.75 cents/bu, an appreciation of 3.5% compared to the previous week.
Earnings were not tied to changes in the fundamentals of supply and demand. The WASDE report, released on Friday (8), showed the USDA quite optimistic about the Brazilian and Argentine crops, with production estimates showing robust production volumes. In this sense, speculative movements drive the gains of corn in the exchange.
Part of this movement may be linked to profit-taking, with agents betting on the decline taking advantage of the lowest prices since 2020 to liquidate their positions. Another possibility is that funds are exiting some of their short positions due to increasing uncertainties about future prices as we approach the period when weather is crucial for the Brazilian safrinha and the US crop. Finally, the financial movement may also be linked to signs of inflation heating up, which would have led some funds to buy commodities instead of selling them.
Intraday (15 min) May/24 contract - CBOT
US export sales: On Thursday (03/07), the USDA released the United States export sales report. The report showed net sales of 1.09 million tonnes of corn in the week ended on February 29, compared to 399 thousand on average for the last three years. Despite the good weekly volume, US export sales in the aggregate for the 2023/24 year remain relatively weak. They total 39.2 million tonnes, well above the 27.9 million recorded in the same period last year but below the average of the last three years of 43.5 million tonnes.
Shipments in the US: On Thursday (03/07), the USDA released the commodity shipment data corresponding to what the United States effectively exports. They showed that 1.2 million tonnes of corn were shipped in the week ended on February 29, compared to 0.6 million in the same week last year and 1.4 million on average over the last three years. In the aggregate of the 2023/24 crop year, 21.4 million tonnes have already been shipped from the ports of the United States, compared to 15.0 million in the same period last year and 22.3 million on average over the last three years. In other words, the shipment data shows the same scenario as the export sales: international demand for corn from the United States is sharper than last crop year but below the average of the last three years.
Corn ethanol production in the US: The latest release from the United States Energy Information Administration (EIA) showed that American plants produced 1.057 million barrels/day of corn-based ethanol in the week ending March 1. This volume is 5.9% above the average of the last five years for the same period. In the aggregate for the year 2024, the average production rose to 1,029 thousand barrels per day, compared to 990 thousand barrels per day in the annual average of the last five years. Therefore, the energy sector may demand significant volumes of corn in 2024.
Weekly export sales - USA (tmt)
USDA's WASDE report
Estimate for corn supply remains high - The USDA's WASDE had limited effects on corn prices on the Chicago exchange. The Argentine crop increased by 1 million tonnes, but Brazil's figures remained virtually unchanged, with only an increase in domestic consumption recorded. Despite these movements, the USDA indication remains the same: a high global supply due to robust crops in Brazil and Argentina.
Increase for the Argentine crop - The USDA's March report estimated that Argentina would produce 56 million tonnes of corn in the 2023/34 crop, an increase of 1 mmt compared to the February figure. If realized, this will be the largest corn crop in the history of Argentina, representing an increase of 20 million tonnes compared to the 2022/23 crop. It is worth noting that the Buenos Aires Grain Exchange, the main domestic reference for the grain market, estimates Argentina's crop at 56.5 million tonnes.
Maintenance of figures for Brazil—The USDA's March report estimated that Brazil will produce 124 million tonnes of corn in the 2023/24 crop, a volume equal to that announced in February and very close to StoneX's estimate of 124.4 million tonnes. However, it is worth noting that the safrinha corn will still go through the entire development period, and the figures are subject to revision.
Revision in the production of some countries does not change the global scenario of supply and demand- On a global scale, the increase in Argentine corn production was offset by declines in estimates for Ukraine, Mexico, and South Africa. Thus, the estimate for global production stood at 1,230.2 million tonnes, a decrease of 2.3 million tonnes compared to February. However, this decline is insignificant in percentage terms, not impacting the quotes.
Brazil
Corn futures appreciated on the B3—In the week ending March 8, corn contracts gained value on B3, following the movement in Chicago. The May contract ended the period at R$60.63/bag, a weekly appreciation of 7.4%.
It is worth noting that the gains recorded in the exchange impact the spot market. In the Southern states, for example, prices have increased widely. In Passo Fundo/RS, StoneX found corn traded on March 7 for R$ 56.00/bag, a weekly gain of 1.82%.
Intraday (15 min) May/24 contract - B3
Progress of the summer corn harvest 2023/24: The summer corn harvest is quite advanced in the southern states, which account for 38% of the acreage. For example, in Rio Grande do Sul, 84% of the crops had already been harvested by Friday (03/08). The harvest is gaining traction in the Southeast, concentrating 23% of the summer corn crops, reaching 35% in Minas Gerais. Finally, the harvest has not yet begun in the North and Northeast states, where 30% of the summer corn area is located, as the corn agricultural calendar is behind schedule. On average, the summer corn crop in Brazil reached 46.6%, 17.3 percentage points above the level recorded in the same period of the previous crop.
Progress of the safrinha corn planting 2023/24: The planting of the safrinha corn 23/24 is nearly finished. It has already exceeded 90% of the estimated area in states like Mato Grosso, Goiás, and Rondônia. The only state where planting is significantly behind schedule is Minas Gerais, where only 10% of the acreage has been sown. In Brazil, the safrinha corn planting is ahead of the previous crop, with 87.4% representing a 12 percentage point advance compared to the previous cycle.
Argentina
Argentinian crop conditions - Data from the Buenos Aires Cereals Exchange shows that Argentina's corn crops remain in good condition. The latest update, released on March 6, indicated 87% of the crops in excellent, good, or normal conditions, the same percentage as last week and 46 percentage points above the same period of the previous crop. Thus, the Grain Exchange estimates production at 56.5 million tonnes in the 2023/24 crop, an increase of 22.5 million tonnes compared to 2022/23.
Harvest starts in Argentina - Last week, the corn harvest started in Argentina. According to data from the Buenos Aires Grain Exchange, 154 thousand hectares were harvested, equivalent to 2.1% of the planted area. So far, the data has shown high productivity: 8.53 tonnes/ha, equivalent to 142.2 bags/ha. StoneX estimates that summer corn productivity in Brazil will be 7.12 tonnes/ha, or 118.7 bags/ha for comparison purposes. It is clear that it is still too early to draw big conclusions, but the signs for the Argentine crop continue to be positive.
Future and spot prices
Futures contracts traded on the CBOT (US¢/bu)
Future contracts traded on B3 (R$/bag)
Spot prices in Brazil (R$/60kg-bag)
