Corn prices fall in anticipation of USDA balance sheet update

Lower oil prices and high planting rates in the US are adding pressure to corn prices, but they could be supported by weather in Brazil and harvest data in Argentina.

On the eve of the USDA's May balance sheet, analysts publish their own forecasts. According to them, the estimate of the corn harvest for Argentina was reduced to 52.14 million tons, and for Brazil - to 122.4 million tons, while the USDA in April estimated them at 55 million tons and 124 million tons, respectively. USDA experts typically don't reduce production forecasts until after the harvest, unless there are some extreme weather events, so the May adjustment will be small, adding to price pressure.

Analysts also expect a decrease in global corn stocks to 314.7 million tons, while Stone X forecasts them at 317 million tons, and the USDA estimated at 318.28 million tons in April.

The grain exchange in Rosario, against the background of prolonged rains and damage to crops by cycads, lowered the forecast for the corn harvest in Argentina in 2023/24 MR to 47.5 million tons, although the sown area was a record 8.89 million hectares.

July corn futures on the Chicago Stock Exchange fell 2.4% to $180.5/t in two sessions (0% for the week, +3.6% for the month) amid lower ethanol consumption and better weather conditions for sowing

In the USA, from April 27 to May 3, ethanol production decreased by 2.2% compared to the previous week to 965,000 barrels/day, and has been below the average of 1 million barrels/day for three consecutive weeks. Declining use of corn in ethanol production is putting pressure on prices, especially amid a possible reduction in exports due to increased supplies from Argentina.

According to NASS, 36% of the planned area was sown with corn in the US on May 5 (42% last year, 39% on average over 5 years). Rains delay sowing, but replenish moisture reserves.

In Ukraine, during the week, purchase prices for corn rose by $3-4/t to $167-170/t or UAH 7,400-7,500/t with delivery to Black Sea ports due to high export demand and a shortage of offers from producers.

In 2023/24, Ukraine exported 23.5 million tons of corn from USDA's forecast of 24.5 million tons (25.2 million tons last year), of which 622 thousand tons in May (524 thousand tons for the same period in May 2023).

Ukrainian corn remains the cheapest on the world market, so it is in demand by importers, especially against the background of rising prices for new crop wheat to $170-185/ton.