- Slow pace of US shipments and sales;
- Increase in the production estimate of the US 2023/24 and 2022/23 crop of Brazil by the USDA;
- Concern about river levels in the US and impacts on grain flow.
- Worsening tensions between Russia and Ukraine;
- Concern about weather impacts on China's corn crop.
The December/23 ended last Friday, September 15, quoted at 476.25 cents/bu, a decline of 1.6% in the weekly comparison. Last week, the USDA supply and demand report was released, much awaited by the market due to the expectations of adjustments in the numbers of the North American crop 2023/24 since the possible revision of the planted area had already been signaled.
USDA raises US production estimate: As noted, agents were very interested in the new US production numbers and were hoping for a pullback in the estimate for the 23/24 crop, driven by adverse weather seen in parts of the Midwest. The average of the market estimates pointed to a fall in production of 2.6 million tonnes compared to the August figure, to 381.2 million, driven by a drop in the average yield to 10.89 mt/ha, against the previous forecast of 10.99 mt/ha. However, the USDA made a smaller-than-expected cut in its yield estimate to 10.91 mt/ha. Still, the big surprise was the planted area, raised by 320,000 hectares to 38.4 million, which boosted US production to 384.4 million tonnes. As a result, ending stocks in 2023/24 advanced from 55.9 to 56.2 million tonnes, almost 2 million tonnes more than the average of market estimates.
About the other players, it is worth commenting on the revision in the 2022/23 Brazilian crop to 137 million tonnes. Another relevant change was in the production estimate for Ukraine's 23/24 crop, which now stands at 28 million tonnes, 500,000 above the previous number. Another country that has received questions about its production is China, where weather extremes have hit. Chinese corn production is concentrated in the northern and northeastern regions, which recorded severe storms and flooding in July and August. Despite this, the USDA kept its estimate for the Chinese crop at 277 million tonnes.
Brazil to become the largest corn exporter: The market has been mainly attentive to the US 2023/24 crop production numbers, but an interesting point to be explored is the 2022/23 crop exports. The USDA estimates that the US exported 42.3 million tons in 2022/23, which puts the country in second place in the main exporters ranking behind Brazil. Matching Brazilian shipments with the American crop year, analyzing the volumes between September 2022 and August 2023, Brazil shipped 50.6 million tonnes of corn. This was the first time since the 2012/13 season that the US did not occupy the top spot among exporters.
Conditions of the American crop: According to the USDA Crop Follow-up Report, 52% of corn crops were rated good/excellent (G/E) on Sept. 10, down one percentage point from a week earlier, down 1 point from the same period last year, and 7 points below the 5-year average. The US crop continues to advance at a good pace. About 34% of the crop is mature, ten percentage points above that recorded in the same period last year and 6 points above the 5-year average. The market now turns its eyes to the harvest, which has reached 5% nationally, in line with what agents expected.
Ethanol production in the USA: According to data released by the Energy Information Administration (EIA), US ethanol production totaled 1,039 thousand barrels per day (tbpd) in the week ended Sept. 8, an advance of 27 tbpd in the weekly comparison. The volume recorded surpassed that observed in the same week last year by 76 tbpd and the 5-year average by 62.2 tbpd. As of Sept. 8, ethanol inventories had reached 21.17 million barrels, 450,000 barrels less than a week earlier.
Weekly export sales - US (thousand tonnes)
US Export Inspections: According to the USDA Export Inspection Report, the US shipped 623,900 tonnes of corn in the week ended Sept. 7, 141,100 tonnes more than a week earlier and 61,600 tonnes lower than at the same time in 2022.
US Export Sales: Net sales for the 2023/24 crop were 753,300 tonnes in the week ended September 7. In the same week of the last crop year, net sales of 583,100 tonnes had been recorded. Commitments for all destinations reached 11.2 million tonnes against 12.3 million in the 2022/23 crop.
River levels in the US are cause for concern: While export sales in the week of Sept. 7 exceeded that of the equivalent week of 2022, export business remains weakened. One of the points that has limited business and brings great concerns for the coming weeks is the river levels in the country. Forecasts for the Mississippi River call for unusually low levels through early October, which could impede the normal grain flow.
