W36: Maize (Corn) Update

In W36 in the maize (corn) landscape, the United States Department of Agriculture (USDA) expects Brazil to outpace the United States (US) as the world's leading corn exporter in the 2023/24 season. Brazil is projected to account for nearly 32% of global corn exports compared to the US's share of about 23%. This shift marks the second time the US has lost the top spot, the previous instance being in 2013 due to a severe drought. Brazil's advantage lies in its warm climate, allowing two corn crops annually. Additionally, Brazil has modernized its logistic routes and benefits from a weak real currency, making its exports more attractive.

In contrast, the US faces challenges, including high production costs, limited available farmland, consequences of past trade disputes, and government restrictions on corn used for ethanol production. These factors led to a drop in US corn production and exports, making the US unlikely to regain long-term leadership, even if it temporarily recovers its top position. Furthermore, Brazil made inroads into China's corn market, securing substantial purchases in recent months.

The National Association of Exporters of Cereals (Anec) expects Brazil's corn exports for Sep-23 to reach a new record of 9.67 million metric tons (mmt), a 41% year-on-year (YoY) increase. China, the primary destination for Brazilian corn, drives this surge. The National Supply Company (Conab) estimates Brazil's corn harvest at a record 131.9 mmt in 2023/24, a 16.6% YoY increase. This situation allows Brazil to capitalize on the global markets, particularly as Ukraine faces sluggish shipments.

Brazilian corn exports intensified in H2-2023, coinciding with a decrease in soybean shipments. China's increased demand following a trade agreement in 2022 has been a significant driver. Year-to-date (YTD) Brazilian corn exports are projected at 34.3 mmt, with total shipments for 2023 estimated to exceed 50 mmt. Up to Aug-23 shipments were primarily destined for China at 20% (4.85 mmt) and Japan at 13% (3.15 mmt).

The Buenos Aires Grains Exchange (BCBA) reported that the 2022/23 corn harvest in Argentina concluded in W36, with 6.72 million hectares (ha) harvested. Argentina’s corn production is anticipated to reach 34 mmt in 2022/23. BCBA noted an average final yield of 84.33 bags/ha, a decrease of 40.33 bags/ha compared to the five-year average. This decrease is primarily due to the drought that Argentina has experienced. BCBA also highlighted that while some areas are still to be harvested in the southeast of Buenos Aires, it is unlikely to alter the overall forecast. The North Nucleus region was the most significantly affected, experiencing a 52.5% decline in average yields compared to the five-year average.

Lastly, corn purchases in deep-water ports like Taman in Russia commenced at a relatively modest level of USD USD 148.70 per metric ton (mt), excluding value-added tax (VAT) in W36. Corn purchases in low-water ports traded at USD 138.08/mt. This is a typical situation for the initial phase, with further price development hinging on importer demand and the pace of agricultural producers' corn sales for export. Quality considerations were generally of minor significance at the start of harvesting. Nonetheless, corn prices in deep-water ports are expected to gradually trend upward.

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