1. Weekly News

Europe

Heatwave Threatens Corn Supply in Eastern Europe and Black Sea Region

Scorching heat across Eastern Europe and the Black Sea region is severely impacting corn crops at a crucial development stage, raising concerns about a supply squeeze. Temperatures have soared above 38°C in Ukraine, a top global corn exporter, while Romania, a significant European Union (EU) producer, faces drought conditions. This extreme weather affects pollination, potentially reducing kernel formation and causing plants to wither. Ukraine's 2024/25 season corn exports are expected to decline by about 20%, with decreased planting areas and yields. Strategie Grains has also revised its estimates for the EU's corn crop. Romania plans to seek over USD 546 million in EU aid to compensate farmers for crop damage affecting more than 2 million hectares (ha) of corn and sunflowers.

Brazil

Brazilian Corn Exports Dropped 47.6% YoY in Jul-24

On July 22, 2024, the Foreign Trade Secretariat (Secex) reported that the volume of unmilled corn (except sweet corn) exported reached 1.58 million metric tons (mmt), only 37.4% of the 4.23 mmt exported in Jul-23. The daily average of shipments for the first 15 days of Jul-24 was 105,499 metric tons (mt), a 47.6% year-on-year (YoY) decrease compared to the 201,458 mt daily average in Jul-23. Due to a reduced supply, the Brazilian corn export program in 2024 is expected to be smaller than in 2023. Additionally, the United States (US) and Argentina have had strong production years, creating a competitive global supply scenario that has resulted in lower prices and diversified buyer sourcing options.

Brazil's Summer Corn Harvest Nears Completion, Second Crop Harvest Progresses

According to the Brazilian National Supply Company (CONAB), the harvest of Brazil's 2023/24 summer corn crop reached 97.8% of the sown area as of July 21. This represents a 1% increase in week-on-week (WoW) but is 0.8% behind 2023's pace. The harvest is complete in Goiás, Minas Gerais, São Paulo, Paraná, Santa Catarina, and Rio Grande do Sul. At the same time, Bahia, Piauí, and Maranhão have made slower progress, with 99%, 92%, and 79% of the area harvested, respectively. The second-crop corn harvest for 2023/24 is also progressing, reaching 79.6% of the area, up 5.4% WoW and 31.7% YoY. Mato Grosso, the largest producer, is ahead with 97.7% of its area harvested, while Maranhão lags with only 44%.

South Africa

South Africa's Corn Production Set to Increase in 2024/25 Following Drought Impact

The United States Department of Agriculture's (USDA) Foreign Agricultural Service projects that South Africa's corn production will rebound in the 2024/25 season, reaching up to 16.5 mmt, driven by higher prices and increased planting. Despite a significant decline in production for 2023/24 due to drought, the country is expected to export 1.5 mmt of corn. The forecast includes a harvested area of 3.1 million ha and improved yields, supported by advanced farming technologies that have partially offset drought effects. Additionally, year-end stocks are anticipated to rise by 20% in 2024/25 due to the higher production levels.

United States

US Corn Condition Rating Dips Amid Favorable Weather

The US corn condition rating dipped slightly over the past week despite generally favorable development weather in the Midwest and Plains. However, forecasts predict a hotter, drier stretch in some western growing areas that could stress developing crops. According to the USDA, 67% of US corn is rated good to excellent, down 1% WoW. 61% of the crop is silking, and 17% are at the dough-making stage, both ahead of the five-year averages.

2. Weekly Pricing

Weekly Maize Pricing Important Exporters (USD/kg)

Yearly Change in Maize Pricing Important Exporters (W30 2023 to W30 2024)

US

In W30, wholesale maize prices in the US remained unchanged at USD 0.16 per kilogram (kg). This represents a 5.88% decrease month-on-month (MoM) and a 38.46% drop YoY. The decline is due to favorable weather conditions and expectations of ample supply, driven by a substantial corn harvest and increased acreage, with harvested area estimates raised by 1.3 million acres to 83.4 million acres. Additionally, the USDA revised its 2024/25 global corn production forecast upwards by 4.2 mmt to 1.224 billion mt, further contributing to the price decrease.

Brazil

In W30, the wholesale price of Brazilian maize rose 5.88% WoW to USD 0.18/kg. This increase is driven by increased domestic interest and intense export activity, particularly in states like Goiás, Mato Grosso, and Paraná. In the third week of Jul-24, Brazilian corn exports reached a 22-week high with 733 thousand mt shipped, marking a 17.3% WoW increase. Exchange rate fluctuations and climate concerns in the US Midwest also influenced price improvements.

Argentina

In W30, the wholesale price of Argentine maize remained at USD 0.17/kg despite a 22.73% YoY decline. The yearly price drop is due to significant progress in the 2023/24 corn harvest, which reached 70.2% of the estimated area, reflecting a 7.3% WoW and 12.1% YoY increase in W29. Additionally, the USDA's Jul-24 report projects global corn production for the 2024/25 season at 1.224 billion mt, an increase of 4.25 mmt from the previous forecast.

Ukraine

The wholesale price of Ukrainian maize remained unchanged WoW at USD 0.15/kg for the third consecutive week in W30. However, the MoM price dropped by 6.25%. This price drop comes despite extreme heat in Ukraine from July 1 to 12, with temperatures soaring up to 41°C in the southern regions, nearing historic highs. The intense heat has accelerated the development of soybean, sunflower, and corn, potentially leading to an early end of the growing season and reduced yields. Corn is particularly at risk during its critical development stage, with high temperatures causing pollen sterilization and poor cob formation.

Romania

In W30, the wholesale price of Romanian maize remained unchanged at WoW at USD 0.22/kg. However, the MoM price increased by 4.76%. This price increase is due to a recent heatwave in Romania, which has severely impacted spring crops, especially corn in Neamt County, where temperatures soared above 40°C, drastically reducing yield expectations. The anticipated positive corn yield has turned disastrous due to the dry conditions, with only a tiny portion of the crop potentially salvageable if it rains soon.

3. Actionable Recommendations

Implement Irrigation in Eastern Europe and the Black Sea Region

Eastern Europe and the Black Sea region should strengthen support for farmers facing extreme heat and drought conditions, severely impacting corn crops at a crucial development stage. These regions can mitigate the adverse effects on yields and stabilize production by providing financial aid and investing in drought-resistant technologies. Ukraine and Romania will benefit from such measures to maintain their positions in global markets. Moreover, enhancing irrigation infrastructure and offering crop insurance can help safeguard farmers' livelihoods against future climatic challenges.

Expand Market Diversification and Support Programs in Brazil

Brazil should expand its market diversification efforts and support programs to address the anticipated reduction in corn exports due to lower supply and increased global competition. Strengthening trade relations with new and existing partners can help offset reduced exports to traditional markets such as China, Japan, South Korea, Mexico, Vietnam, and Spain. Additionally, Brazil should look at opening new markets in the Middle East (Saudi Arabia, UAE, Qatar), Africa (Nigeria, Egypt, South Africa), Southeast Asia (Indonesia, Malaysia, Thailand), Europe (Germany, Netherlands, Italy), and Latin America (Colombia, Chile, Peru). Increasing agricultural technology and infrastructure investments will enhance productivity and resilience against climate impacts. This approach will benefit Brazilian farmers by ensuring stable market access and competitive pricing, even in challenging seasons.

Expand Domestic and Export Market Support for US Corn

The US should expand domestic and export market support to capitalize on favorable weather conditions and increased corn acreage. Enhancing infrastructure and logistics can improve market access and competitiveness. Additionally, providing financial support and resources for farmers will help maintain high crop quality and yields. This support could include government grants, low-interest loans, and subsidies provided by federal and state agricultural programs. The USDA's upward revision of global corn production forecasts underscores the need for strategic planning to maximize export opportunities and stabilize domestic prices.

Sources: NoticiasAgricolas, UkrAgroConsult, Brownfield Ag, NoticiasAgricolas, PortalDBO, Portal Do Agronegócio