Corn Weekly Report

Last week (07/29-08/02), corn futures depreciated on the Chicago exchange. The September contract ended the period at 386.50 cents/bu, a weekly depreciation of 2%. When considering the continuous price, which refers to the nearby contract, last week's closing price is the lowest since October 2020.

The main factor behind the depreciation was the change in weather outlook for the US agricultural belt. The forecast of hot and dry weather in the second week of August, which caused corn futures to appreciate between August 22 and 26, no longer exists, with models now indicating a wet weather in most regions.

Some other factors also helped in the depreciation. On Monday (29), the USDA update showed 68% of American corn crops in good/excellent conditions, 6 percentage points above the average of the last five years for the period, indicating high productivity. Then, on Thursday (1), StoneX from the United States released its first crop estimate for the 2024/25 season also indicating high productivity: 11.44 ton/ha, against 11.36 in USDA's current forecast. If this productivity materializes, it will be the largest in history and will result in the production of 386.27 million tonnes, a volume that would represent the second largest corn crop in the history of the United States, behind only the 389 million produced in the last cycle.

In addition to the fundamentals of the corn market itself, macroeconomic factors also weighed on the grain depreciation. Last week, the release of weak employment data in the United States triggered fears of a recession in the world's leading economy, a phenomenon that led investors to flee from risky assets and brought the possibility of a contraction in demand for commodities. For a more comprehensive analysis of risk aversion in the global economy, access the report from StoneX.

Intraday (15 min) September/24 contract - CBOT

Source: CBOT. Design: StoneX.

For the Brazilian corn market, the major consequence of the increase in risk aversion was a new round of devaluation of the Brazilian real. Now, one USD is equivalent to more than BRL 5.75, the highest value since February 2021, increasing the competitiveness of Brazilian exports. Following the USD, corn appreciated on B3 last week, with the contract expiring in September closing the period quoted at BRL 61.83/bag, a weekly appreciation of 1.2%. In general, the USD appreciation has supported the price of corn in Brazil, counterbalancing the increase in supply resulting from the harvest progress. Since July 12, the continuous corn contract in Brazil has appreciated about 10%.

Giving more details about the second crop harvest, the StoneX estimate indicates that it reached 93.2%. In most states, the process is practically over, leaving only the miners, who have so far harvested 45% of the crops.

Another important update made by StoneX last week concerns the crop estimates for Brazil. For the 2023/24 cycle, the figures are practically consolidated, with only a few adjustments being made. In summary, the estimate is 26.058 million tonnes in the 1st crop, 93.553 million in the 2nd, and still 2.191 million in the 3rd, totaling 121.8 million tonnes, the third largest crop in the history of Brazil.

For the 2024/25 season, StoneX released an estimate for the 1st crop. In summary, a significant reduction in acreage was estimated, which would decrease from 3.64 million hectares in 23/24 to 3.4 million hectares, a reduction of 6.7%. The states with the largest estimated cuts are Rio Grande do Sul, Paraná, Santa Catarina, and Goiás. Decrease in the area of summer corn is not a new phenomenon. Since the late 90s, the planting of this crop in the 2nd semester has been losing ground, mainly to soybean. The annual decrease of 6.7%, however, is more representative and responds to the discouragement of farmers with the current price level.

Intraday (15 min) September/24 contract - B3

Source: B3. Design: StoneX.