International corn market remains stable awaiting USDA

The international corn market seems stable, fluctuating within a price range and awaiting some new variable. Wheat and oil have also shown price adjustments in recent days, not offering a bullish variable for corn. The climate in South America is progressing well, with no problematic scenarios for the summer crop in December. The assessment variable, then, is the point that we have already warned about in our editions, the flow of exports from the United States. This December report has this expectation, that is, upward adjustments in demand that will reduce stocks, even if still discreetly.

The wheat harvests in Australia and Argentina are containing a stronger upward momentum for wheat, despite the ongoing crisis caused by the war in the Black Sea. Russia continues to export, and there is a glimpse of a halt in the conflict as of January. Could an end to the war or a prolonged truce generate a sharper price adjustment in some commodities, such as fertilizers, fuels and corn/wheat? It is very likely.

The US scenario is already known, with a very comfortable stock position. The factor that could trigger a strong reduction in these stocks is related to the composition of domestic demand and exports. Domestic demand is well projected by USDA, and there is no significant potential for growth that could compromise stocks. However, some points call attention because the Department is projecting stability or even a decline in domestic demand, such as feedstuff and ethanol. A change in these expectations would certainly affect stocks.

The key point, however, is the export data. After reviewing the data, exports for the 2024/25 season reached 34.2 mln tons, after last week’s good number of 1.7 mln tons. This volume is well above last year’s number, in the same period, which accumulated 25.7 mln tons in the business year. USDA is projecting 59 mln tons for 24/25, just 1 mln tons above the previous year. In 2020, exports reached 70 mln tons and in 2021 they reached 63 mln tons. So, an upward correction cannot be considered a surprise.

The issue is the weaker Brazilian exports this year, which will reach 38/39 mln tons at most, well below the last two years. In addition, Ukraine’s smaller crop will take its exports to only 23 mln tons. Therefore, for this December USDA report, to be released on the 10th, a small upward correction on the data on domestic demand and US exports and some stock cuts are expected. Nothing yet that could profoundly change the direction of corn prices on the CBOT in the medium term. However, it is important to monitor the pace of US exports in the international price environment. In January, USDA will finalize the data for the 2024 US crop, a figure that is always tense for the market due to the difficulty in anticipating the likely number to be released.

Meanwhile, the crop in Argentina, the main exporter in the first half of each year, is going very well. The rains were quite regular at the end of November and early December. There is still no serious news of the presence of leafhoppers in the crops that could compromise the production potential, especially because Cordoba and Buenos Aires are still finishing planting. The local crop still has ninety days to be defined, both for corn and soybeans, and, in times of neutral weather, full attention to short-term forecasts is essential.

Argentina’s presence with good exports in the first half of the year could become a factor for greater balance in international supply. This is because only the US and Argentina will have available supply to meet global demand. However, the balance does not suggest low prices, but perhaps a profile for levels of USD 4.40/4.80 a bushel on the CBOT.

Tags: United States, US, stocks, Market, Argentina, Ukraine, demand, corn, USDA, export, price, Brazil