A decrease in the rate of corn imports to China is putting pressure on quotations

In recent years, world corn prices have been supported by a sharp increase in its imports by China from 6-7 million tons to 30 million tons in 2020/21 MY and to 20-22 million tons in 2021/22 MY. This year, as a result of the covid-19 pandemic, China reduced corn imports to 19.01 million tons in the January-October period, which is 27.5% less than the corresponding figure last year. Despite the possible reduction in demand for fodder grain in 2023 against the background of covid quarantines, there are already signs that consumption will increase in the future. Pork prices in China have resumed growth, and increased demand for meat will increase demand for feed.

In addition, corn prices are rising in the country, although its crop has just been harvested. According to the National Food and Strategic Reserve Administration, average corn prices as of November 16 rose to 2,846 yuan/t, or $396.92/t, from 2,796 yuan/t, or $395.47/t a week ago, and the year therefore – 2527 yuan/t or $357.43/t.

December corn futures in Chicago fell 2% to $249.9/t on Friday, down 5% for the week, pressured by higher crop forecasts in Brazil amid favorable planting weather, weak export demand and a decision EPA to minimally increase the quota for biofuels in 2023 to 15 billion gallons, with a slight increase by 2025.

According to the CFTC CoT reports, for the week of November 23-29, traders reduced the number of open contracts by 10.5% due to the expiration of December options.

Export sales of corn from the USA for the week of November 18-24 decreased by three times – from 1.85 million tons to 602.7 thousand tons, and in total for three months of the season they reached 5.773 million tons, out of the 54.6 million tons predicted for 2022/23 MY.

March corn futures on the Paris exchange fell by 1.5% to €299.5/t since Monday, and by 15% since the beginning of the month. The number of short positions increased by 20 thousand to 440,927 contracts, as more long positions were closed than short ones.

Brokerage firm StoneX has increased the forecast of the corn harvest in Brazil in 2022/23 MY by 5.5% to 130.3 million tons compared to the previous estimate.

Dry and frosty weather has arrived in Ukraine, which allowed to speed up harvesting. As of December 1, 15.5 million tons of corn have been threshed from 2.5 million hectares or 60% of the area with a yield of 6.13 tons/ha, but from the middle of the week, precipitation may begin, which will stop the work.

Purchase prices for corn in Ukraine remain at the level of $175-208/t or UAH 7,500-7,600/t, but the premium for certified corn for delivery to China has risen to $3-5/t amid increased demand for contract fulfillment.

In Istanbul, Russian inspectors as part of the JCC continue to delay the maintenance of courts, so for now corn prices will remain low.