Corn prices remain under pressure from Brazil's harvest and forecasts of higher US harvests
Ahead of the USDA's July report, analysts are publishing their own forecasts, according to which the US corn crop will increase by 6.5 million tons to 383.9 million tons compared to June's estimate, thanks to the expansion of planted areas. It is also expected that there will be an increase in the estimate of ending stocks in FY 2023/24, which will negatively affect prices.
Against the background of favorable weather for crops, December corn futures in Chicago fell 14.4% for the month to the lowest level since the end of 2020 at $160.8/t, although they were twice as expensive in April 2022.
According to USDA's NASS, the number of U.S. corn crops in good or excellent condition increased 1% for the week to 68% (55% last year), and flowering was recorded in 24% of areas, which is 10% above the 5-year average. Rainfall forecasted in corn-growing regions will have a favorable effect on crops in this phase of development.
According to Bloomberg, corn prices have fallen for 6 consecutive quarters, marking the longest decline since 1959. As a result, US farmers have accumulated the largest corn stocks since 1988.
According to US MSG estimates, in 2024 the income of farmers in the country will decrease to the lowest level since 2006 and will be 1.7% below the 20-year average and 40.9% below the record level of 2022, taking into account inflation. At the same time, the USA is rapidly losing its position as the world leader in corn exports due to increased competition with Brazil. In addition, Argentina recently sent its first shipment of corn to China in 15 years.
The agency Conab reports that in Brazil on July 7, corn of the first harvest was harvested on 95% of the area (96% last year), and of the second - on 61% of the area (29.3% last year).
Heat of 30-35 o C will prevail in Ukraine this week, which will negatively affect corn crops, which are generally in good condition thanks to the June rains. Lack of precipitation and high temperatures during the flowering period (in the next 2 weeks) can reduce the potential of the future harvest.
Demand prices for corn of the old and new harvest with delivery to the Black Sea ports are still $160-170/t, but farmers are in no hurry to conclude forward contracts, hoping for price growth in the new season.
