Corn prices remain under pressure from the completion of planting and heat in the US and rain in Brazil

Rainfall in central Brazil, improving prospects for a second corn crop, and high US planting rates add pressure on quotes, but they are supported by hot, rainless weather in the US corn belt.

Safras&Mercado experts, against the background of favorable weather, increased the forecast of corn production in 2022/23 MY by 6.7 million tons to 137 million tons (120.2 million tons in 2021/22 MY), in particular, safrina corn – by 5, 6 million tons to 97.8 million tons (84.4 million tons in MY 2021/22).

According to NASS USDA data, as of May 28, 92% of the planned area was planted with corn in the United States (84% last year and 84% on average over 5 years), and 69% of crops were in good and excellent condition (73% last year).

Corn exports from the US for the week fell 1% to 1.3 million tons, and the total for the season reached 28.68 million tons, against the USDA forecast of 45 million tons, which seems quite realistic at the rate of shipments. However, increased exports from Brazil in August may sharply reduce demand for American corn.

On the Chicago Stock Exchange, corn prices fell 3-4% during trading yesterday on US seeding data and Brazilian weather, but July futures closed unchanged at $233.2/t (+4% from the start of the week), and December fell 0.7% to $205.4/t (+3.5%) on forecasts of heat in the Midwest in the next 2 weeks.

In the US corn belt, temperatures of 30-33 ^o C without precipitation will last for another 10-14 days, which may worsen the condition of crops. However, only part of the corn belt is under the influence of drought, and rains and thunderstorms will pass in the Central and Southern Plains.

In Ukraine, as of May 25, 3.682 million hectares were sown with corn (4.405 million hectares in 2022 and 5.14 million hectares in 2021), so the harvest is unlikely to exceed 20 million tons. The lack of productive precipitation in May and in the next two weeks will negatively affect crops, although temperatures in the range of 22-25 ^o C slow down the rate of soil moisture loss.

Due to interruptions in the work of the grain corridor, only 2.017 million tons of corn were exported in May, and in general in the season – 26.9 million tons (22.3 million tons last year), against the USDA forecast of 25.5 million tons. In June, another 2 million tons are planned to be shipped tons of grain, as there are 44 ships waiting to enter the ports, which will be able to load about 3 million tons of grain.

During the week, demand prices for corn with delivery to the Danube ports fell by $10/t to $173-175/t, to the Black Sea ports – by $7-10/t to $160-163/t amid increased supply. Manufacturers intensified their sales, not expecting a rise in prices in the coming months, especially given the likely extension of the ban on supplies to neighboring EU countries.

Argentina and China have agreed on a new corn export protocol that will simplify grain deliveries to China, which will increase competition for this market with the United States, Ukraine and Brazil, especially after the latter received permission to export to China last year.

Tags: corn, prices