Corn prices fall amid active planting in the US and the cancellation of purchases by China

Corn prices in Chicago fell yesterday under pressure from news of strong planting rates in the US, favorable weather in Brazil and the third cancellation of private export sales of corn to China.

Yesterday on the exchange in Chicago, July corn futures fell by 2% to $230.2/t (-7.7% for the month), and December - by 2.2% to $204/t (-9.5 % per month, -19% per year).

Yesterday, the US MSG announced the cancellation of a private export sale of 272,000 tons of corn to China, which was the third refusal in a row and confirmed the intentions of Chinese buyers to wait for the supply of cheap new crop corn from Brazil. China is diversifying its corn supply channels, especially given the reduction in imports from Ukraine as a result of Russian aggression, which is why last year it allowed the import of corn from Brazil.

According to market operators, the first 53,000 tons of South African corn purchased by the COFCO corporation about 2 months ago arrived at the Chinese port of Machong, which indicates the emergence of a new export channel for the supply of corn from South Africa to China.

In the USA, as of May 7, 49% of the planned area was sown with corn (21% last year and 42% on average over 5 years), - reports NASS USDA. In the next 7-10 days, warm weather with slight precipitation is expected, which will accelerate the sowing and development of crops.

In Brazil last week there were slight precipitations, which replenished the reserves of soil moisture. Corn crops are in good condition, so the market is expecting an adjustment of the harvest forecasts.

Analysts expect the USDA's Friday report to raise the corn crop forecast in Brazil by 1 million tons to 126 million tons, and in Argentina to cut it by 2 million tons to 34.9 million tons. They also expect a decrease in ending corn stocks in FY 2022/23 and US corn production growth in FY 2023/24 compared to the previous season from 348.8 to 385 million tons due to increased planting area and yield.

In Ukraine, corn prices fell to $185/t with delivery only to the Danube ports, as the Black Sea ports are closed due to the blockade of the grain corridor by representatives of the Russian Federation. In 2022/23, Ukraine exported 24.6 million tons of corn out of USDA's forecast of 25.5 million tons, so by the end of the season, it could ship another 2 million tons of grain.