- Bearish Factors
- Higher stock forecasts at the end of the 23/24 and 24/25 crop years;
- Planted area in the US above expectations;
- US stocks above expectations;
- Progress in the second crop harvest;
- Good condition of US crops.
- Bullish Factors
- StoneX estimates that the Brazilian second crop 23/24 will be 14.5% lower than 22/23;
- Spread of corn leafhopper in Argentina;
- Weather issues in parts of the Chinese agricultural belt;
- Slow commercialization pace in Brazil and the US.
Last week (June 24-28), corn futures traded on the Chicago Board of Trade (CBOT) fell significantly. The September contract closed the period at 407.50 cents/bu, a weekly drop of 7.5%. The main factor behind the losses was the USDA's reports on planted area and stock positions in the US
Regarding the area, the market believed that US farmers had planted 36.57 million hectares of corn, an increase from the 36.44 million reported by the USDA in the March 31 planting intentions report. However, the final planted area was even higher: 37.02 million hectares. Using the USDA's productivity estimate of 11.13 tonnes/ha, this increase in planted area resulted in an additional 5 million tonnes of expected supply.
Regarding stock data as of June 1, the market expected them to show 123.78 million tonnes of corn to be marketed in the US. However, the USDA's official data indicated 126.83 million, suggesting that demand for US corn is lower than anticipated.
Besides the area and stock reports, the weather has largely benefited crop development, adding bearish pressure on prices. There were floods in the northern agricultural belt, particularly in northern Iowa, southern Minnesota, and southeastern South Dakota, and some eastern belt states suffered from drought, notably Illinois, Ohio, and Indiana. These factors reduced the good/excellent crop rating by 3 percentage points between June 16 and June 23. Even so, 67% of the crop is still rated good/excellent, 7 percentage points above the five-year average.
Perhaps more importantly, weather forecasts are positive. Both European and American models show rains returning to the eastern belt, eliminating one of the major risks for the crop. Flooding remains a concern, but USDA data indicates impacts are currently limited to specific areas.
Intraday (15 min) September 24 contract - CBOT
Source: CBOT. Design: StoneX.
While the US crop develops without major issues, the advancing harvest in Brazil shows that drought has significantly impacted the second crop productivity. In July, StoneX reduced its production estimate for São Paulo, Minas Gerais, Goiás, and Tocantins, bringing the total second crop supply to 92.93 million tonnes, a 0.6% decrease from the June estimate and a 14.5% drop from last year's production. For the full report, click here.
With investors in Chicago focusing on the US crop, Brazilian problems have not impacted CBOT corn prices. However, they have had more repercussions on B3. Last week, the July contract was quoted at BRL 57.60/bag, a significant drop of 1.3%, but not comparable to the 7.5% decline in Chicago. Besides supply issues, the dollar's appreciation also helped contain the drop in B3 corn prices.
To conclude comments on Brazil's supply, StoneX estimates that 44.8% of the second corn crop is already harvested, compared to a 25.5% average over the past three years. The most advanced states in harvest are Mato Grosso (57.5%), Rondônia (54.8%), and Paraná (52%).
Intraday (15 min) July 24 contract - B3
Source: B3. Design: StoneX.
In Argentina, there are few updates. The harvest progress shows poor yields in the northern country, which was expected due to corn leafhopper issues. As a result, the Buenos Aires Grain Exchange maintained its crop estimate at 46.5 million tonnes for the ninth consecutive week. The harvest reached 54.9%, slightly below the five-year average for the period.
On the demand side, the stock position report indicated that consumption of the US crop is slower than expected, potentially leading to USDA estimate cuts in July. Specifically, corrections in feed consumption estimates, closely related to the stock report, may occur.
Regarding exports, the main indicator analyzed by the market is weekly export sales. The latest report showed a balance of 542 thousand tonnes, raising 23/24 crop exports to 53.3 million tonnes. With 10 weeks left in the crop year, the US should have no trouble reaching the USDA estimate of 55.9 million tonnes.
In the corn ethanol sector, production in the week ending June 21 was 1.043 million barrels/day, 0.9% lower than the same period last year. However, this was only the fifth time weekly production in 2024 fell below the same week in 2023, out of 25 weeks this year. Therefore, there is no cause for concern yet.
In Brazil, Comex Stat data showed exports gaining momentum. With the advancing harvest, the country exported 637 thousand tonnes of corn in the first three weeks of June, compared to 421 thousand tonnes throughout May. However, the country is still far from the peak export period, typically between August and December, when 6 to 9 million tonnes of corn are shipped monthly.
US Export Sales (thousand tonnes)
Source: USDA. Design: StoneX.
Future and Spot prices
Futures Contracts Traded on CBOT (US¢/bu)
Futures Contracts Traded on B3 (R$/bag)
Spot prices in Brazil (USD/60kg bag)
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