W19: Maize (Corn) Update

In W19 in the maize (corn) landscape, global corn production in the 2023/24 season is forecast at a record high, with the biggest increases expected in the US, Argentina, the EU, China, and Serbia, while Ukraine and Brazil are projected to have smaller harvests. Global corn use is expected to increase by around 4%, with foreign consumption increasing by a similar amount. With lower prices, global corn imports are estimated to grow just over 5%, driven by increases in several countries, including China, Egypt, Vietnam, Algeria, Mexico, and Colombia. Total global corn supplies are forecast at 16.7B bushels, the highest since 2017/18 due to the slight increase in the 2023/24 opening stocks. Global corn ending stocks in the 2022/23 season increased by 15.5MMT to 312.9MMT, mainly reflecting higher stocks for the US that are partially offset by declines in Brazil and China.

Tridge’s analysis indicates that, so far in the 2022/23 season, 624.3K MT of US corn shipments to China have been canceled due to Chinese buyers turning their attention to the Brazilian corn market, which has strong safrinha corn crop prospects as the rainfall in central Brazil has generally been beneficial for the development of this crop. Chinese buyers anticipate a further fall in prices due to the sharp price decline in Brazilian corn. The absence of new purchases by China and the lack of good exports by Argentina have not been enough to keep US corn sales leverage. Consequently, the US corn market witnessed a decline in exports, leading to a loss in the ability to sustain upward price movements. Thus, the US July corn contracts in W2 of May 2023 experienced a decrease, dropping by 2.05% WoW to USD 584.2 cents per bushel, reaching an all-time low in 2023.

The USDA reports that as of the week ending May 5th, US corn export inspections reached 963.35K MT, a decline of 555.22K MT from the previous week and 513.9K MT compared to the same week in 2022, continuing to trail the pace needed to meet projections for MY 2022/23. US corn shipments were mainly destined for Mexico and Japan. The USDA also indicates that US corn planting for the 2023/24 season as of May 7th reached 49%, against the market expectations of 48%, 26% of the previous week, 21% achieved in the same period in 2022, and 42% of the multi-year average. Furthermore, the USDA outlines that 12% of the US corn crops have already germinated, compared to 6% last week and 5% in the same period in 2022. Argentine corn producers harvested 19.7% of the suitable area, an increase of 2.2% points WoW. Argentine average corn productivity was estimated at 4.5K kg/ha, with the production estimate maintained at 36MMT. Only 4% of the Argentine corn crop was in good or excellent condition in W18, while the share in normal condition decreased to 42% and the percentage in fair or bad condition increased to 54%.

SAFRAS and Mercado report that marketing of Brazil’s second corn crop in the 2022/23 season achieved 24.3% of the forecasted production of 92.2MMT, down from 31% of the expected production of 84.404MMT in May 2022 and below the five-year average sales of 32.6%. However, compared to early April 2023, early May sales advanced by only 4.4% points, caused by an environment of low prices, low liquidity in exports, and caution by producers, as some areas could still suffer from possible frosts as winter approaches. Similarly, IMEA reports that Brazilian corn sales in the 2022/23 harvest reached 38.65% of the expected total production, an advance of 4.91% points in the comparison from April 2023 to March 2023. The increase is linked to the interest of some producers in selling their corn crops, since negotiations are delayed compared to recent years and the harvest is approaching, raising concerns about storage.

According to SECEX, in the first 4 working days of May, Brazilian unground corn (except sweet corn) exports totaled 24.33K MT, 2.23% of the total of 1.088MMT shipped throughout May 2022. The daily average of Brazilian corn shipments was 6,083MT, a decrease of 87.7% compared to 49,476MT achieved in May 2022. In financial terms, in the first four working days of May, Brazilian corn exports earned USD 11.11M, against USD 375.218M in May 2022. The daily average value of Brazilian corn exports stood at USD 2.777M, down 83.7% compared to USD 17.055M in May 2022. CONAB reports that Brazilian summer corn harvesting reached 67.5% of the sown area, with emphasis on São Paulo (100%), Paraná (90%), Minas Gerais (87%), Rio Grande do Sul (86%), Santa Catarina (78%), Bahia (65%), Goiás (34%), Maranhão (15%) and Piauí (8%). For the Brazilian first corn crop, harvesting reached 76%, while 27.3% is in maturation, 4.5% in grain filling, and 0.7% in flowering. As for the second Brazilian harvest, CONAB indicates that 100% of the predicted area has already been sown. So far, Brazilian corn crops are divided with 28.6% already in grain filling, 45.8% in flowering, 24.8% in vegetative development, and 0.8% in the emergence phase.

Lastly, South Africa’s maize supply in the 2023/24 season is projected to reach 17.112MMT, including an opening stock of 1.94MMT, as of May 1st, 2023, and domestic commercial deliveries of 15.28MMT. South Africa expects no maize imports in the season, with early deliveries of less than 140K MT and a surplus of 32K MT. South African maize demand in the 2023/24 season is forecast to total 11.592MMT, including 5.49MMT processed for human consumption, 6MMT processed for animal and industrial consumption, 17.2K MT for grist, 30K MT withdrawn by producers, 45K MT released to end-consumers, and balancing amount of 10K MT such as net receipts and net dispatches. South Africa also anticipates maize exports in the 2023/24 season to reach 305K MT of processed products and 3MMT of total whole maize. Additionally, South African closing stock in MY 2023/24 is expected to amount to 2.215MMT as of April 30th, 2024, with an average processed quantity of 958.93K MT per month, indicating available stock levels for 2.3 months.