The corn market in the second half of the season will be very interesting

According to forecasts, the world corn production in 222/23 MR will decrease compared to the previous season from 1.217 to 1.168 billion tons, but will exceed the 1.13 billion tons of the 2020/21 season. However, the delay in corn harvesting in Ukraine and sowing in Argentina due to drought may lead to forecast adjustments in the near future.

In the December USDA report, the harvest estimate for Ukraine will definitely be lowered, since as of December 1, due to unfavorable weather, only 2.5 million hectares or 60% of the area, from which 15.5 million tons of corn were harvested with a yield of 6.13 tons/ha, were threshed. A few dry and frosty days this week have allowed harvesting to resume, but yesterday it snowed again, and the coming days will see warmer temperatures and more rain added to the snow.

In November, the USDA estimated the harvest in Ukraine at 31.5 million tons, but even if farmers thresh all crops without loss, this year's harvest will not exceed 25 million tons, although last year it reached 42 million tons.

The purchase prices for corn in Ukraine remain at the level of $175-206/t or UAH 7,500-7,600/t under the pressure of a decrease in world quotations and low rates of calls to Black Sea ports.

Romania will harvest its lowest maize crop since 2007 this year, as the drought reduced it by 40-50%, and the average yield is around 3 t/ha. The drought affected not only Romania, but other EU countries as well, so the harvest forecast for the EU has been reduced to 53-54 million tons compared to 71 million tons in 2021/22 FY.

Argentina will see little rain this week, but the intense heat will cause additional plant stress, which will negatively impact soybean and corn crop potential. The weather this week will not allow to speed up the sowing, which is going very slowly. In general, the conditions are not favorable for the development of crops that are in great need of rain.

As of December 1, only 19.4% of the area was sown with soybeans and 23.8% with corn out of the planned 7.3 million hectares, which is 20% and 6.2% lower than last year's pace, respectively.

An intensification of trade disputes over GMO corn between Mexico and the United States could collapse the market for South American corn. Back in December 2020, Mexico banned imports of GMO corn starting in 2024 and phased out the use of glyphosate, and on November 28, the US threatened to sue Mexico if it did not reverse the decision. The U.S. believes that a phase-out would significantly affect trade and harm farmers in both countries, while Mexico has responded by offering to allow imports of yellow corn for animal feed but ban white corn intended for human consumption.

But that compromise doesn't sit well with US National Corn Growers Association President Tom Haag, who said the decision to block any biotech corn violates the terms of the US-Mexico-Canada Agreement (USMCA).

Mexico is the largest buyer of American corn, which in 2021/22 MR purchased 16.8 million tons. At the same time, more than 90% of corn in the United States is genetically modified.

December corn futures in Chicago fell another 1.5% to $246.2/t from Monday, losing 8% for the month and closing in on early March 2022 levels, though still 12.6% above last year level.