A downgrade in the U.S. crop forecast and a new heat wave are supporting corn prices

A heat wave that covered the US corn belt last week, as well as forecasts of heat next week, which could reduce the harvest of corn and especially soybeans in the US, support the quotation.

After a crop tour of 7 major US corn and soybean growing regions, Pro Farmer estimated US corn yields in 2023 at 10.79 t/ha and total production at 380 million tons, which would be lower than the USDA's August estimate of 383 .8 million tons, but will become the third historical indicator. Soybean yield is estimated at 3.34 t/ha and total production at 111.85 million t, while the USDA forecasts them at 3.42 t/ha and 114.4 million t, respectively.

According to NASS USDA, the number of corn crops in good or excellent condition in the U.S. for the week decreased by 2% to 56% (54% last year), and a lack of rain in the next 10 days will further worsen the condition of the crop.

The export of corn from the USA for August 18-24 increased compared to the previous week by 17% to 597.1 thousand tons, and in general in the season reached 36.779 million tons from the forecasted 2022/23 MR of 41.3 million tons, so the initial stocks of the new season will increase by 4 million tons.

According to the AgRural agency, 82.8% of second-crop corn had been threshed in Brazil as of August 24 (up from 94% last year), but harvesting has been delayed by complex logistics between fields and warehouses, including truck shortages and long unloading lines. First-harvest corn has already planted 7.5% of the planned area, 5% ahead of last year's pace thanks to the early onset of the seasonal rains, which usually begin in September. The active export of Brazilian corn reduces the demand for Ukrainian and American grain.

According to the Buenos Aires Stock Exchange, on August 23, 96.9% of corn was harvested in Argentina with an average yield of 5.05 t/ha. Exchange experts believe that the area of corn sowing in the country in the new season will grow by 3% compared to last year to 7.3 million hectares.

Against the backdrop of a severe drought in the south of Europe, the European Commission lowered the forecast for corn production in the EU in 2023/24 from 63 to 61.7 million tons compared to previous estimates, which will still exceed the 52 million tons of the 2022/23 season.