The active export of corn from Brazil worsens the prospects for American corn

A significant volume of second-crop corn production in Brazil and favorable weather conditions for planting the new crop are forcing Argentine farmers to increase sales, which increases competition with exporters from Ukraine and the United States. China, after opening the market for Brazilian corn, reduced the demand for Ukrainian corn, especially in view of the delay in deliveries.

Brazil exported 6.4 million tons of corn in December, which is 3 million tons more than in December 2021, and in general, since the beginning of the season (since March), it shipped 40 million tons, which is the largest number since 2013 and significantly exceeds the 5-year average export volume - 26 million tons.

USDA forecasts that Brazil will export 44.5 million tonnes of corn in FY2022/23, but actual exports may be higher, given the good outlook for first-crop corn production, although it is mostly destined for domestic processing. According to traders' estimates, Brazil can deliver 1.5 million tons of corn to China in December-January alone.

Buyers in the EU are largely dependent on supplies of high-quality, low-cost, non-GMO corn from Brazil and Ukraine, increasing competition for US corn. In 2022/23 MR, the share of corn from these countries in the volume of European imports increased compared to 2021/22 MR from 83% to 92% (48% from Brazil and 45% from Ukraine).

From July 1 to December 31, EU countries imported 14.6 million tons of corn, which is twice the corresponding figure of the previous year. With USDA's import forecast of 21.5 million tons, another 7 million tons of grain will need to be purchased by the end of the season.

In the 2022/23 MR, Ukraine exported 12.6 million tons of corn (11.5 million tons at this time last year) thanks to the intensification of supplies of grain from last year's harvest in July-September. The delay in harvesting due to unfavorable weather has not yet affected the pace of exports, and the warm and dry weather has allowed harvesting to be intensified, so the export forecast from the USDA at the level of 17.5 million tons is quite realistic, which will allow at least another 5 million tons to be exported.

The export of corn from the USA for the period from September 1 to December 29 amounted to only 9.6 million tons, which is 26.7% lower than last year's pace. Since the USDA estimates exports at 52.7 million tons, the U.S. could ship another 43 million tons of grain by the end of the season, and even more if ethanol production cuts further.

The global corn market remains under significant supply pressure in Q1 2023, so only harvest progress in Argentina can support prices. Argentina has already exported 30.5 million tonnes of corn this season and could ship another 6 million tonnes by the end of February to meet the USDA's forecast of 36.5 million tonnes. However, traders believe farmers will hold back sales until the new crop is harvested, so until the end the country exports no more than 2 million tons of corn per season.