U.S. corn prices rise amid grain corridor closures and Brazil acreage cuts forecast

Quotations for corn should have fallen against the background of a significant improvement in the condition of corn crops in the US last week, but the exit of the Russian Federation from the grain agreement led to a speculative jump in prices.

Yesterday on the exchange in Chicago, September corn futures rose by 5.9% to $208.2/t (+7% for the week, -11.9% for the month), and December – by 5.6% to 210 .4 $/t (+6.7% for the week, -12.2% for the month).

Forecasts of dry weather and heat in the U.S. next week, which could reduce crop potential, have boosted prices.

The state of corn crops in the US improved for the third week in a row. On July 16, 57% of crops were in good or excellent condition (55% a week ago, 64% last year).

During the week of July 7-13, the export of corn from the USA amounted to 363.8 thousand tons (1.09 million tons for this period last year), and in general in the season it reached 33.87 million tons (50.3 million tons last year). The low rate of exports is connected with the reduction of purchases of corn by China from the USA and the activation of purchases of corn from Brazil.

Since July 2022, Ukraine has exported almost 17 million tons of corn through the grain corridor, the main buyer of which was China. Therefore, after the end of the grain agreement, China will be forced to buy even more corn from Brazil.

We will remind that in June the import of corn to the People’s Republic of China increased by 11.5% to 1.85 million tons.

The Safras&Mercado agency predicts that, against the background of low prices and strong competition for land, the area planted with corn in Brazil in 2023/24 MY will decrease compared to the previous season from 22.2 to 22 million hectares, in particular under first-harvest corn – from 4.2 to 4.1 million hectares, and the second – from 15.5 to 15.4 million hectares, as a result of which the total harvest will decrease by 2 million tons to 137.4 million tons.

At the same time, it is expected that the area of soybean sowing will grow from 44.5 million hectares to a record 45.6 million hectares due to the high profitability of its cultivation, so the harvest in 2023/24 MR may reach 163.2 million tons (156.1 million tons in 2022/ 23 MY).

In Ukraine, the purchase prices for corn in the Danube ports rose to $175-177/t DAP against the backdrop of reduced supply. In the first half of July, the export of corn amounted to 728,000 tons, which almost corresponds to 766,000 tons for this period last year.

Tags: Ukraine, China, corn, Brazil, prices, USA, Black Sea grain corridor