W25: Maize (Corn) Update

In W25 in the maize (corn) landscape, the USDA expects global maize production in the 2023/24 season to reach 1.223 billion mt, an increase of 3.14 million mt compared to 1.151 billion mt in 2022/23. The US record-breaking corn production estimate of 387.6 million mt has been confirmed, with an increase of 39 million mt from 2022/23. Ukraine's corn production forecast has also risen significantly from 22 million mt to 24.5 million mt, although it remains 2.5 million mt lower than in 2022 and 17.6 million mt below the record set in 2021/22. The EU is optimistic with a projected maize yield increase of 11.3 million mt to 64.3 million mt compared to 2022, which may positively impact feed grain production. Global maize consumption in 2023/24 is estimated to rise by 2.21 million mt to a record high of 1.206 billion mt, driven by increased imports at lower prices. Global maize exports are also expected to rise by 2.5 million mt to 197.76 million mt compared to 176.37 million mt in 2022/23. Argentina is projected to experience a recovery in corn production, increasing from 35 million mt to 54 million mt in 2023/24, along with a substantial boost in export potential from 23 million mt to 40.50 million mt. Ukraine's corn exports are forecasted to increase by 2.5 million mt to 19 million mt in the 2023/24 season, although this volume remains 8 million mt below the current season's expectations.

SECEX reports that, in the first 11 working days of June-2023, Brazilian unground corn (except sweet corn) exports totaled 458.82 thousand mt, 46.37% of the 989.3 thousand mt shipped throughout June-2022. The daily average of Brazilian corn shipments was 41.71 thousand mt, a decrease of 11.5% compared to 47.11 thousand mt achieved in June-2022. Experts forecast Brazilian corn exports to reach 50-51 million mt, which is expected to become a floor factor for corn prices in Brazil throughout the second half of 2023. Additionally, experts anticipate that the second half of 2023 will be heavily focused on exporting, regardless of the US corn production performance. A significant volume of Brazilian corn has already been allocated for export, particularly from July and August onwards. The peak of corn exports from Brazil is expected to occur between August and September, providing stability to prices in the market. Meanwhile, Brazil's unground corn exports were valued at USD 125.3 million in the period, 40% of USD 313.127 million exported in total in June-2022. The daily average value of Brazilian corn exports stood at USD 11.3 million, down 23.6% compared to USD 14.91M in June-2022. The price per ton obtained also dropped 13.7% in the period, from USD 316.50 in June-2022 to USD 273.3.

In W25, corn prices in Brazil experienced a recovery from the downward trend observed since Mar-2023. CEPEA attributes this shift to the external appreciation of corn, driven by concerns about crop development in the US. Insufficient rainfall in the US Midwest since the beginning of June-2023 has the potential to reduce US corn productivity. While the USDA estimates still indicate higher corn production in the US, the crop conditions are deteriorating. In Brazil, CONAB’s estimates continue to predict a second record-breaking harvest.

On June 23rd, the Mexican government announced the implementation of a 50% tariff on white corn imports, aimed at boosting domestic production and restricting the importation of genetically modified corn. This decision could potentially heighten the trade dispute between Mexico and North America, as a significant portion of Mexico's corn supply originates from the US and South Africa. The tariff measures are expected to remain in effect until the end of 2023.

The Crop Estimates Committee expects South African commercial maize production in the 2022/23 season to reach 16.1 million mt, an increase of 5% YoY, and the third-largest harvest on record. With South Africa's annual maize demand at around 12 million mt, there could be over 3 million mt available for export markets in the 2023/24 season. Despite planting efforts beyond the optimal window due to heavy rainfall disruptions, South Africa expects a plentiful maize harvest. In contrast, Zimbabwe faced challenges with a dry spell and crop damage caused by Cyclone Freddy. Zimbabwe's maize production for the 2022/23 season is estimated to reach around 1.5 million mt, significantly lower than the 2021/22 season. As a result, with an annual maize requirement of 2.2 million mt, Zimbabwe may need to import about 0.5 million mt to meet its annual maize demand. South Africa's surplus maize production is expected to be crucial in fulfilling potential import demands from Zimbabwe, which will likely rely more on South Africa compared to previous years. The increased demand towards the end of 2023 could add upward pressure on maize prices. Additionally, uncertainty regarding the 2023/24 season's crop due to an expected El Niño phenomenon may further impact maize prices and Zimbabwe's harvest. Despite these challenges, securing maize supplies from South Africa and Zambia should be more feasible for Zimbabwe compared to previous struggles in 2016. It’s worth noting that Zimbabwe's allowance of genetically modified maize imports provides opportunities for South African grain exporters.

Lastly, the USDA expects Kenyan corn production in the 2023/24 season to reach 3.2 million mt, up 10.3% compared to the 2022/23 estimate of 2.9 million mt. However, despite the increase in corn production, Kenya is expected to still rely on corn imports due to a high consumption estimate of 3.9 million mt, surpassing production by 0.6 million mt. High corn prices are anticipated to persist in the 2023/24 season, driven by low domestic and regional supplies that keep prices above historical levels. Corn prices in MY 2022/23 reached a record high of USD 533/mt due to drought-induced production shortfalls, high fertilizer prices, and insufficient regional imports to stabilize prices. As a result, the average MY 2022/23 corn prices nearly doubled from USD 272/mt to USD 420/mt. These high prices are encouraging Kenyan farmers to shift from crops like sugarcane to maize, leading to a projected increase of 100 thousand ha in the area harvested. The USDA also indicates that Kenya's feed and residual consumption is expected to remain at 200 thousand mt, as high corn prices continue to pose competition between human consumption and the feed sector. The USDA forecasts that maize stocks for the 2023/24 season will remain below historical levels at 136 thousand mt due to tightening supplies. To meet the demand and bridge the gap, imports for the 2023/24 season are projected to reach 750 thousand mt, unchanged from 2022/23.