USDA cuts US exports of corn and raises European imports

US exports for this 22/23 business year are being restricted in view of high premiums in the Gulf of Mexico and very strong Brazilian exports. USDA, in its December update, cut its annual export forecast due to the low pace of weekly sales. On the other hand, it sharply cut production in Ukraine and increased imports from Europe. Despite the worrisome Argentine climate scenario, the projection of the local crop still remained at significant 55 mln tons.

The US picture for corn now shows an attempt to reach the 2023 season without major regional supply difficulties. With the drop in oil prices, there are chances of a slowdown in the demand for ethanol and, consequently, for corn. Avian flu, despite its coverage this year in the country, has discreet effects on the whole US chicken industry and the context of demand of the feedstuff segment.

However, with no surprises in other demand indicators, the big factor until 2023 is the export scenario. The United States continues to export less than one mln tons per week, a low volume for this period of the year. High premiums in the Gulf of Mexico and resistance to selling in the interior of the country continue to contain the flow of sales. However, this week there was a reasonable decline of prices on the Chicago Board of Trade (CBOT), below USD 6.50/bushel, a factor that could contribute to an improvement in the pace of weekly sales. USDA now points to a decline of 10 mln tons in sales compared to last year, that is, 52.7 mln tons. One of the reasons for this decline is the strong Brazilian sales this year, which are already breaking records and could reach 45 mln tons, twice as much as in 2021.

There has been a major change in Ukraine’s situation. Production for 2022 has been reduced from 31.5 to 27 mln tons. Exports, however, increased to 17 mln tons, and there was a retraction in domestic demand. This means that Ukraine will not have a large volume to meet world demand until the second half of 2023, mainly to meet the Middle East and Europe.

For Europe, in turn, there has been a new production cut to 54.2 mln tons and an increase in imports for 2023 to 21.5 mln tons. These numbers, however, are still far from the indications of the European Union itself, which points to 53.3 mln production and 23 mln tons of imports. In any case, it is clear that Europe will remain an importer for most of the next nine months.

Everything indicates, in this global configuration, that demand will end up flowing to US corn in the coming few months, and it is likely that USDA will need to revise US export figures upward. The volume of the Argentine crop is still unknown, Brazil will reduce sales after January, and Ukraine will have no volume. Wheat lows help balance this picture a little, but there is still a long way to go to confirm good production in Argentina and the United States in 2023.

Planting in Argentina evolved very little last week. It reached 32.7% and is following the line of the also delayed 2021/22 planting. Planting delay is not a serious problem in Argentina and does not necessarily cut yield projections. However, it is a significant warning point. In the last fifteen days, the rains have reached the Nucleus region with 30 to 90 mm. However, a strong heat wave with temperatures of up to 40C hit the country last week and may have affected the already scarce soil moisture.

This week must maintain the regime of lack of rain and strong heat in the country. For the last two weeks of the year, the meteorology is showing a strong resumption of rains and, if this is confirmed, the delayed planting could have rapid evolution. Loss of strength from La Nina and strong heating of the South Atlantic would help the climate by the end of the year in the region.

Tags: USDA, Brazil, Europe, US, Production, forecast, imports, demand, Ukraine, exports, corn