- More positive USDA estimates for Ukrainian exports;
- A good volume of rainfall was recently recorded in the main grain-producing regions of Brazil and Argentina.
- High shipments and export sales from the US in the week ending on November 30;
- Despite the more favorable weather pattern, concerns about weather conditions in South America persist.
The corn market was marked by high volatility last week. At times during the period, the March 2024 contract tested the 490 cents/bu threshold and even managed to disrupt the 492 cents/bu level. Nonetheless, CH24 could not maintain such levels, ending the week quoted at 485.5 cents/bu, a mere 0.2% increase compared to the previous week.
Corn-based ethanol production in the US: As released by the Energy Information Administration (EIA), US ethanol production totaled 1,076 thousand barrels per day (tbpd) in the week ended Dec. 1, up 65 tbpd from a week earlier and 22 tbpd above the 5-year average for the same period. The stocks also ramped up by 60 thousand barrels to 21.44 million.
US export inspections: The US export inspection report began to reflect the hike in sales indicated in the Export Sales reports of the past few weeks. According to the USDA, 1.2 million tonnes of corn were shipped in the week ended November 30, a significantly higher volume than the previous week's (408.9 thousand tonnes) and the same week in 2022 (840 thousand tonnes). Exports total 8.4 million tonnes, compared to 6.7 million in the same period of the previous season.
US export sales: The USDA reported that 1.3 mmt of corn were traded in the week ending on November 30, below the 1.9 mmt recorded a week earlier but well above the 691.6 thousand tonnes observed in the same week last year. Thus, the accumulated sales total 25.7 million tonnes, 6.7 million more than the previous crop's same interval. It is interesting to highlight that, despite the increase in sales, the commitments to China are below what was observed in the previous crop. 1.4 million tonnes were sold to China, compared to 3.7 million tonnes in 2022.
Weekly export sales - USA (tmt)
Sales of wheat to China contributed to the support of corn prices. For another week, the corn received support from the strengthening observed in wheat prices. Throughout the past week, through its daily sales report, the USDA announced the sale of 1.12 million tonnes of SRW wheat to China for delivery in 2023/24. The high volume traded raises the banter about the size of the Chinese wheat crop, as this increased interest may indicate that the country will obtain a lower production than currently expected by the market in 2023/24. Last week, the March 2024 contract for wheat advanced 4.8% in Chicago, ending the quoted period at 631.75 cents/bu.
WASDE report brings no big surprises: On December 8, the USDA released its monthly supply and demand report. On the US balance side, the only revision was the hike of just over 630 thousand tonnes in US exports in 2023/24 to 53.3 million tonnes. Thus, the ending stocks for 2023/24 decreased to 54.13 million tonnes, slightly below the market's average estimate (54.66 million tonnes).
Regarding the South American crop, the USDA figures have not undergone any changes. The Brazilian corn crop production for 2023/24 was maintained at 129 million tonnes, while the market's average estimates pointed to a reduction of 2 million tonnes, while the Argentine crop for 2023/24 remained at 55 million tonnes, slightly above the market's average estimates (54.8 million tonnes). For comparison, StoneX estimates Brazil's crop at 126 million tonnes, while the Cereals Exchange also mentions 55 million for the Argentine crop.
Compared to other players, it is worth highlighting the hike of 1 million tonnes in Ukrainian production in 2023/24, reaching 30.5 million tonnes, which resulted in an equal volume increase in the country's shipments, reaching 21 million tonnes.
On the B3, corn futures also registered high volatility throughout the last week, but unlike contracts at CBOT, they could support the gains achieved during the period. January 24 ended last Friday (8) at BRL 71.44/bag, an appreciation of 2.2% for the week.
Corn exports from Brazil: Last week, ANEC announced that it estimates that 6.86 million tonnes of corn will be shipped in December, below the 7.4 million recorded last month and slightly above the 6.2 million recorded in December of last year. Today, MDIC will release its weekly trade balance report, bringing the corn shipments up to December 8.
CONAB reduces Brazil's corn crop for 2023/24: On Thursday, the CONAB's monthly supply and demand report was released. The Company reduced the total crop production for 2023/24 to 118.5 million tonnes, compared to 119.1 million in November, due to adjustments in area and productivity of the first crop, now estimated at 35.3 million tonnes. Despite CONAB maintaining its estimate for the 2nd crop at 91.2 million tonnes, there is great concern in the market regarding its performance. Due to the delay observed in soybean planting, there has been much talk about a possible reduction in the winter crop planting window for the cereal, which could result in some reduction in acreage planted. Furthermore, although it is still early, it is always important to pay attention to the weather conditions for crop development.
Weather conditions in Brazil: The Center-West Brazil has had good rainfall over the past few weeks, bringing some reprieve to the market. Nonetheless, the models indicate that a drier pattern will return next week. According to the crop follow-up report from Brazil conducted by StoneX, the first corn crop planting continues to be behind schedule, reaching 76.6% at the end of last week, compared to 89.5% in the same period last year. The planting of soybeans, which is important because it affects the planting window of safrinha, reached 90.7%, compared to 93.8% in the same period last year.
Argentinian crop condition: According to data from the BCBA, 40.3% (or 2.9 million hectares) of the estimated 7.1 million hectares have already been planted. On the crop conditions side, due to the good volume of rainfall recently recorded, 36% of the crops are in good/excellent conditions, 10 points higher than a week ago and 18 points above the same period last year. For this upcoming week, the models indicate the occurrence of good precipitation volumes, which can contribute to the development of the Argentine crop.
