- Slow pace of shipments 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;
- Recent increase in the sales pace by the US;
- Concerns about the weather impacts on the Chinese corn crop.
After several weeks without a well-defined direction, corn futures posted a sharp appreciation on the CBOT last week. December/23 ended the period quoted at 492 cents/bu, an increase of 3.2% compared to the previous week.
US crop conditions: The weather in the U.S. remains a focal point for market participants, and conditions have been favorable for the quick drying of grains and the operation of combines. According to the USDA Crop Progress Report, 23% of American corn crops had been harvested by October 1, an 8-point increase compared to the previous week, two p.p. less than expected by the market. Compared to the previous season, the harvest is 2 points ahead of the 5-year average for the same period. As expected by the market, 53% of the crops remain classified as in good/excellent condition, indicating no easily detectable decline in the remaining US crop.
River levels in the US: River conditions cause concern among market participants, as very low readings persist at various points along the Mississippi River. According to NOAA data, the levels in Memphis were at -3.1 meters this Monday morning (09), slightly below the observed one week before (-3 meters) and 1.6m below the low-stage mark. The NOAA continues to warn about maintaining low water levels until at least October 22, predicting that the river level in Memphis could drop to -3.3 meters. Despite concerns and low readings, barge freight rates have declined in the weekly comparison. This is attributed to some success in avoiding closures due to grounded vessels and a relatively subdued international demand for US grains. Nevertheless, the topic remains at the forefront of attention, as forecasts do not indicate an improvement in water levels.
Ethanol production in the US: The NASS report showed that the US used 11.24 million tonnes of corn for ethanol production in August, compared to 10.94 million tonnes a year ago. With this, 131.5 million tonnes of corn were crushed for ethanol production in the US 2022/23 crop, 410,000 less than the USDA projection in September. Still regarding biofuel production, 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 29, the same volume observed one week earlier. Despite the drop, the recorded number exceeded the one observed in the same week of last year by 120 tbpd and the 5-year average by 64.8 tbpd. On the stocks side, on September 29, ethanol stocks had reached 21.88 million barrels, 164 thousand less than a week before but 290 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 continues to record low shipment volumes. The country exported 625.9 thousand tonnes of corn in the week ending September 28, 84.7 thousand tonnes less than the previous week and 57.3 thousand below the same time in 2022. The accumulated shipments totaled 2.64 million tonnes in the 2023/24 season, 257.6 thousand more than in the previous season.
US export sales: The net sales for the 2023/24 season totaled 1.8 million tonnes in the week ending September 28, 974.2 thousand tonnes more than the previous week. Furthermore, the volume exceeded that recorded in the same period last year by 1.6 million tonnes. With the high volume, the US caught up with last season. The country traded 14.4 million tonnes in 2023/24, compared to 13.2 million in the same period of the previous season.
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 the port of Odesa. 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.
Consolidated US exports in August: The US Census Bureau released the commercial data for August. The corn exports in the 2022/23 crop year from the US (Sep/22 to Aug/23) totaled 42.09 million tonnes, slightly below the USDA's September estimate for the 2022/23 season of 42.29 million tonnes.
StoneX's US 2023/24 crop estimate: Last Tuesday, October 2, StoneX released its new estimate for the US 2023/24 crop. The American productivity increased from 10.98 to 11.02 tonne/ha, surpassing the USDA estimate of 10.91 tonne/ha. With this, US production increased from 383.61 to 386.15 million tonnes, against USDA's September estimate of 384.42 million. You can access the full report here.
Corn planting in Brazil: According to StoneX's report, the planting of the 2023/24 summer corn crop reached 30.8% by the end of last week, five percentage points less than a year ago. Click here to access the full report.
Black Sea: At the beginning of last week, new reports emerged that Ukraine would be shipping an additional five ships with grains, following the success of the two previous initiatives. Throughout the week, Kyiv continued to defy Russia. By the end of last week, the Ukrainian navy had already announced 12 ships ready to enter the temporary corridor created to transport grains in the Black Sea. Another subject that drew attention the previous week was a Turkish ship being hit by a mine near one of the ports in Ukraine. Despite the initial speculations, the details that emerged later indicated that the mine was outside the temporary corridor created by Ukraine and that the vessel was not part of the 12 ships intended for grain transportation. In addition, the reports indicated that the damage to the Turkish ship was not serious and that the operation was not interrupted.
On the other hand, even though the flow of grains through the temporary corridor has been occurring without interruptions, the war still brings uncertainties regarding corn supply. On Friday, October 6, Ukraine reported that drone attacks damaged port infrastructure at the Reni port on the Danube River. The continuity of Russian attacks on the ports in the region is a cause for concern, given that the export route through the Danube River has been crucial for the Ukrainian grain flow since the end of the agreement for grain export through the Black Sea.
The monthly USDA report, always eagerly anticipated by the market, will be released on Thursday, October 12.
