Corn prices are falling in anticipation of the updated USDA balance sheet

Lower oil prices and high planting rates in the US are increasing pressure on corn prices, but they may be supported by weather in Brazil and harvest data in Argentina.

On the eve of the May USDA balance sheet release, analysts are publishing their own forecasts. According to them, the corn harvest estimate for Argentina was reduced to 52.14 mln tonnes, and for Brazil – to 122.4 mln tonnes, while USDA estimated them at 55 mln tonnes and 124 mln tonnes respectively in April. Usually, USDA experts do not reduce production forecasts until the end of the harvest, unless there are any weather disasters, so the May adjustment will be insignificant, which will increase pressure on prices.

Also, analysts expect a decline in world corn stocks to 314.7 million tons, while Stone X forecasts them at 317 million tons, and USDA in April estimated at 318.28 million tons.

the Grain exchange in Rosario amid prolonged rains and damage to crops by cicadas has lowered its forecast of corn crop in Argentina in 2023/24 MG to 47.5 million tons, although the sowing area amounted to a record 8.89 million hectares.

the July corn futures on the Chicago stock exchange for two sessions fell by 2.4% to 180,5 $/t (0% for the week, +3.6% for the month) amid declining consumption for ethanol and improved weather conditions for sowing.

In the United States for April 27 – may 3, ethanol production decreased compared to the previous week by 2.2% to 965 thousand barrels/day, and for three consecutive weeks is below the average of 1 million barrels/day. Reducing the use of corn in the production of ethanol increases pressure on prices, especially against the background of a possible reduction in exports due to increased supplies from Argentina.

According to the NASS, in the U.S. as of May 5, corn was planted on 36% of the planned area (42% last year, 39% on average for 5 years). Rains delayed sowing, but replenish moisture reserves.

In Ukraine, during the week, the purchase price of corn increased by 3-4 $/t to 167-170 $/t or 7400-7500 UAH/t with delivery to the ports of the black sea due to high export demand and lack of supply from producers.

In 2023/24 MY, Ukraine exported 23.5 mln tonnes of corn out of USDA forecasted 24.5 mln tonnes (25.2 mln tonnes last year), including 622 thsd tonnes in May (524 thsd tonnes in the same period of May 2023).

Ukrainian corn remains the cheapest on the world market, so it is in demand from importers, especially amid rising prices for new crop wheat to 170-185 USD/t.

Tags: prices, corn