Improving harvest forecasts for Brazil and falling wheat prices drops quotations on corn

The good harvest of second-harvest corn in Mato Grosso, Brazil’s main producer of cereals and oilseeds, is increasing pressure on corn prices. China’s decision to start importing corn from Brazil has led to falling prices, and yesterday’s speculative collapse in wheat prices in anticipation of unlocking exports from Ukraine accelerated the decline.

It is expected that this year’s saffron harvest will not only exceed last year’s minimum, but also reach a record level, as early sowing and soybean harvest allowed to sow most of the corn of the second harvest in the optimal time. In the state of Mato Grosso, as of May 27, corn was harvested on 2.4% of the area, and the total harvest in 2021/22 MY, according to IMEA estimates released in early May, could reach a record 39.3 million tons.

However, local analysts lowered the forecast for the total corn harvest in Brazil to 114.3 million tons, although the USDA in May estimated it at 116 million tons.

July corn futures in Chicago fell 3.2% to $ 296.6 / t yesterday and December 2.7% to $ 280 / t in December, while June futures in Paris fell 3.2% % to 340.25 € / t or 364.7 $ / t against the background of the collapse of wheat prices by 3-7%.

In the United States, sowing is accelerating, and as of May 29, 86% of the area has been sown with corn, and 61% of seedlings have been sown compared to 87% and 68%, respectively, on average over 5 years. This improves the potential for future harvests.

During the week of May 20-26, corn exports from the United States decreased by 25% to 1.39 million tons, and in total in the season reached 42.278 million tons, which is 17.4% lower than last year. Therefore, to reach the projected USDA of 63.5 million tons is almost impossible.

As of May 26, 4.4 million hectares were sown with corn in Ukraine, which is 14% less than last year. SovEkon experts increased their previous forecast for the corn harvest in Ukraine by 1.2 million tons to 27 million tons, but lowered the estimate of sown areas.

June futures for Black Sea corn in Chicago yesterday fell 0.9% to $ 340.75 / t, almost unchanged for the month.

In the physical market, demand prices for Ukrainian corn delivered to Danube ports or the western border remain low at $ 230-240 / t due to huge queues of wagons at crossing points waiting for wheelsets to be replaced or reloaded into Eurocars.

Exports of corn from Ukraine rose from 600,000 tons in April to 1 million tons in May, indicating improved logistics for supplies to the western borders. However, without unblocking the ports, the rate of exports will decline again in July-August, when the EU begins to harvest.