- Slow pace of shipments and sales in the US;
- Concern about river levels in the US and impacts on grain flow;
- There are signs from Russia that it does not rule out the resumption of the Grain Agreement despite continuing tensions.
- Tensions between Russia and Ukraine;
- Rain in the US may limit corn harvest progress;
- Concerns about the weather impacts on the Chinese corn crop.
In the last week, corn futures ended without a clear trend. Even though contracts appreciated until Thursday (28), all gains were given back on Friday (29). December/23 ended the period practically unchanged, quoted at 476.75 cents/bu, a decrease of 0.1% compared to the previous week.
US crop conditions: According to the USDA Crop Progress Report, the harvest in the country had reached 15% by September 24, 2 percentage points below market expectations, but 4 points above the same week last year and 2 points above the 5-year average for the same period. The crops classified as good/excellent have advanced 2 points to 53%, which puts the current condition 1 point above that observed in the same period last year. However, such improvement no longer affects the market as much since advances in good/excellent condition at this time are ineffective in raising the country's productive potential. The weather models indicate that most of the corn belt has been affected by low rainfall volumes over the past week, so it is expected that the USDA will indicate good progress in the harvest in its crop monitoring report today (Oct 2). The forecasts indicate that throughout this week, the Midwest will not receive large volumes of rain again, which should contribute to the harvest progress. You can access the full report here.
River levels in the US: Monitoring weather conditions will be important to analyze the harvest pace and the river logistics in the US, which has been affected by the lack of rain. According to NOAA data, the levels in Memphis were at -3 meters this Monday (02) morning, 1.5m below the low-stage mark. The NOAA warns about maintaining low water levels until at least mid-October, which should continue to affect the flow of barges.
Ethanol production in the US: According to data released by the Energy Information Administration (EIA), US ethanol production totaled 1,009 thousand barrels per day (tbpd) in the week ending September 15, a decrease of 59 tbpd compared to the previous week. Despite the drop, the recorded volume exceeded the one observed in the same week of last year by 154 tbpd and the 5-year average by 78.2 tbpd. On the stocks side, on September 22nd, ethanol stocks had reached 22.05 million barrels, 367 thousand more than a week before and 441 thousand more than in the same period last year.
Weekly export sales - US (thousand tonnes)
US export inspections:According to the USDA Export Inspection Report, the US shipped 660.8 thousand tonnes of corn in the week ending September 21, 15.5 thousand tonnes less than the previous week but 111 thousand above the same time in 2022. Although the volume has come above the registered one year before, the current scenario is one of concern since the river levels remain low, which can affect the pace of shipments. The accumulated shipments totaled 1.96 million tonnes, 266 thousand more than in the same period of the previous season.
US export sales:The net sales for the 2023/24 season totaled 841.8 thousand tonnes in the week ending on September 21, 275 thousand more than the previous week. In addition, volume exceeded that recorded in the same period last year by 330,000 tonnes. However, in total, the US traded 12.6 million tonnes versus 13 million in the same period of the previous season. As mentioned in last week's report, the season is just beginning and the current delay does not necessarily indicate that the country will not reach the volume estimated by the USDA (52.1 million tonnes). However, it is still a cause for concern and deserves to be monitored.
Black Sea:The last week was marked by the absence of major news regarding the Russia-Ukraine conflict. News reports indicated that Russia had taken measures against grain-related structures at Odessa port. In addition, the Kremlin states that it does not rule out the possibility of resuming the Grain Agreement, but that the UN's requests are not realistic.
Quarterly Stocks Position in the US:Last Friday (29), the US quarterly stocks report was released. On September 01, the country recorded stocks at 34.57 million tonnes of corn, a number that represents the final stock of the 2022/23 season. Despite the volume being below the market's average estimates, this was insufficient to support prices. In addition, soybean stocks remained at 7.29 million tonnes, a level that is not comfortable but signals a lower-than-expected use of soybeans in the fourth quarter of the crop year, which weighed on grain prices.You can access the full report here.
StoneX's estimate for the Brazilian crop: StoneX updated Brazil's crop estimate this morning. StoneX has once again reduced its production estimate for the summer 2023/24 corn crop, by 2.6% compared to the September figure to 27.5 million tonnes. Regarding the 2022/23 cycle, the winter and third crops were reduced to 108.4 million tonnes and 2.2 million tonnes, respectively. Even with the total corn production cut in 2022/23 to 139.2 million tonnes, the volume remains a record for the country. Access the full report here (2022/23 Crop | 2023/24 Crop).
