Accelerating corn harvests in Argentina and Brazil are putting pressure on quotes

Corn prices in Chicago remain under pressure from increased acreage and heavy U.S. inventories, while the acceleration of harvest in South America will keep quotes from rising in the near term.

According to the Buenos Aires Grain Exchange, 54.9% of corn has been harvested in Argentina, the average yield is 6.93 t/ha, and grain moisture has decreased to optimal values.

The AgRural agency reports that in Brazil, against the backdrop of dry and hot weather, corn of the second harvest has already been harvested on 49% of the area (33% last year), which is a record for the entire period of the company's observations. Maize yields are good in the states of Mato Grosso and Goiás, but in other states it is below average due to prolonged lack of rainfall.

StoneX lowered its forecast for Brazil's corn crop from 121.75 million tons to 121.18 million tons, which is in line with the USDA's forecast.

December corn futures on the Chicago Mercantile Exchange are trading at their lowest since late 2020 at $165.8/t (-19% y-o-y) under pressure from favorable weather for crops and strong US inventories, which are 22% higher than last year.

During June 21-27, the export of corn from the USA decreased in comparison with the previous week by 29% to 819.6 thousand tons, and in general in the season reached 42.48 million tons, which is 28% ahead of last year's pace.

At the same time, quotations support the high rates of corn processing in the US. According to the USDA, in May the amount of corn used for ethanol production increased by 7.4% compared to April to 12.9 million tons, and the total for the season reached 103.3 million tons, or 74.6% of the USDA's annual forecast , which corresponds to the average 8-year indicator.

According to USDA's NASS, the number of corn in good or excellent condition for the week decreased 2% to 67% (51% last year), and corn is flowering in 11% of the area, which is 5% above the 5-year average.

Traders' attention is focused on the weather in Ukraine and the Russian Federation, where intense heat can negatively affect corn crops. Therefore, it is currently very important how much precipitation will fall this week in these regions.

In Ukraine, there is almost no export demand for corn, and on the domestic market, it is offered for 6800-7200 UAH/t with delivery to the factory, which generally satisfies sellers who still have leftovers.