High Planting Rates in the US
As of April 23, the US had planted 14% of its planned corn area, compared to 7% last year and an average of 11% over the past five years, according to NASS USDA. Dry and warm weather is expected in the next 7-10 days, which will likely accelerate the sowing of soybeans and wheat. Currently, 9% of the planned areas are sown with soybeans (5% on average over five years), and only 5% of the areas are planted with spring wheat (7% on average).
During the week of April 14-20, the US exported 913.8 thousand tons of corn, bringing the total for the season to 22.36 million tons – a 36% decrease compared to last year’s pace. High planting rates in the US are causing a downward pressure on corn prices on the Chicago Stock Exchange, where May corn futures are trading at a low level and December futures have fallen to their lowest since 02/22/23 at $215.2/t.
Favorable Weather in Brazil Affects Corn Prices and Trade
In Brazil, favorable weather is prevailing in most regions where second-crop maize is grown, particularly in the state of Mato Grosso. However, in the state of Paraná, sowing was completed after the optimal timing, leading to a risk of crop damage due to drought in May. Over the next 7-10 days, precipitation is expected to decrease, and temperatures in Mato Grosso will exceed 30°C, potentially indicating the early start of the dry season.
In April, USDA experts estimated Brazil’s corn crop at 125 million tons, though local analysts predict production could increase to 131 million tons. This will largely depend on whether the rains continue into May. Brazil’s corn exports for the current season reached 10 million tons, compared to 3.5 million tons at the same time last year. To claim the title of the world’s largest corn exporter, Brazil must ship at least 50 million tons. However, as the soybean export season begins, corn supplies may slow down and resume in July, with China already buying corn for delivery in July.
Impact on Global Corn Prices
The high planting rates in the US, coupled with favorable weather conditions in Brazil, are putting pressure on global corn prices. On the Chicago Stock Exchange, May corn futures are trading at $255/t, and July futures at $239.4/t. These low prices are impacting quotes on the stock exchange in Paris, bringing them down to levels that preceded the start of the war in Ukraine.
The increased corn production in both the US and Brazil may lead to a surplus in the market, causing prices to drop further. However, the export of second-crop corn from Brazil is expected to pick up in July, which may help stabilize prices. It is crucial to monitor weather conditions and planting progress in these major corn-producing countries, as they have a significant influence on global corn prices and trade.
Implications for International Trade
As the US and Brazil continue to compete for the title of the world’s largest corn exporter, the impact on international trade becomes more apparent. While the US struggles with lower export numbers this season, Brazil’s corn exports have been steadily increasing. This competition between the two countries affects global corn prices and the strategies adopted by other exporting countries.
Countries importing corn will need to adjust their purchasing strategies based on the fluctuating corn prices and availability. They must consider factors such as weather patterns, planting rates, and geopolitical tensions that may influence the corn trade. As a result, it is essential for importers to diversify their sources and maintain a close watch on global corn production trends to ensure a stable supply.
In conclusion, high planting rates in the US and favorable weather conditions in Brazil are impacting global corn prices and international trade. These factors create both opportunities and challenges for exporting and importing countries alike. By closely monitoring weather patterns, planting progress, and global corn production trends, countries can better adapt their strategies to navigate the ever-changing landscape of the international corn trade.