Global feed market: Spring seeding prospects are good, but US corn exports are expected to improve

In the week ending March 3, 2023, global corn prices continued to fall, with Chicago corn futures hitting lows not seen since August, but eventually coming off earlier lows. Recently, the corn planting belt in the United States received good rainfall, and sufficient soil moisture created favorable conditions for spring sowing and early crop growth. U.S. corn export sales remain weak. At the same time, potential delays in the planting of second season corn in Brazil and export supply constraints in Argentina and Ukraine mean U.S. corn is likely to attract more demand in the coming months.

Chicago Board of Trade May corn futures closed Friday at $6.3975 a bushel, down 1.5 percent from a week ago. Mei Wan 2 yellow corn for April shipment was quoted at $7.2325 per pu, down 1.6 percent from a week ago. June corn futures on EURONEXT traded at 271.75 euros a tonne, down 2.8 percent from a week earlier. The FOB price for Argentine corn in Shanghe is $299 a ton, down 4.5 percent from a week ago.

International oil futures have risen this week, largely on the back of positive demand from China, the world's largest crude importer. Brent crude for May delivery, the global benchmark, closed at $85.83 a barrel, up 3.21 percent from a week earlier. West Texas Intermediate crude for April delivery, the most actively traded contract on the New York Mercantile Exchange, closed at $79.68 a barrel, up 4.40 percent from a week ago. The ICE dollar index closed Friday at 104.488, down 0.64 percent from a week ago.

Prospects for spring sowing in 2023 are favorable

With the U.S. spring planting season about to begin, world weather patterns create favorable conditions for spring planting. Recent good rainfall in the Midwest helps replenish soil moisture. The National Oceanic and Atmospheric Administration (NOAA) is forecasting widespread rain from Friday through Monday across much of the south-central United States and into the Ohio Valley, with localized rainfall of more than 2 inches. The 8-14 day outlook points to more seasonally rainy weather in parts of the U.S. corn belt between March 9 and 15. Consider the impending end of the La Nina weather pattern, which means the Midwest is likely to get plenty of rain during the planting season and could ease drought conditions in the West.

At its annual Outlook Forum at the end of February, the USDA projected 91 million acres of U.S. corn planted in 2023/24, up about 3 percent from a year earlier. Based on normal weather and trend yields, the USDA's preliminary estimate for this year's corn crop is 15.085 billion bushel, up about 10 percent from last year, which would be the second-highest crop on record after 2016/17.

Us corn prices are competitive and export demand could improve

The US Department of Agriculture's weekly export sales report showed net corn sales of about 600,000 tonnes in the week ended February 23, down from 850,000 tonnes a week earlier. Total US corn export sales are down 39.2 per cent year-to-date, compared with 39.8 per cent a week ago. So far in 2020/23, U.S. corn sales to China totaled about 4.5 million tons, down 62.9 percent from the same period last year.

There have been rumors among traders in Chicago this week that China is buying a lot of U.S. corn. Even though these rumors have yet to be confirmed by the USDA, traders remain confident that demand for U.S. corn exports will improve. With Argentina's corn crop down, Ukraine's corn export supply limited and Brazil's current export supply drying up, the months before Brazil's second corn season hits the market mid-year could provide a window of opportunity for U.S. corn export sales, analysts said. A Chicago-based Agri-Resource research report also noted that U.S. corn prices are currently attractive, so it is hard not to be bullish on an improving outlook for export sales. As of March 2, Argentine corn was quoted at US $299 per tonne in Upper River, Brazilian corn at US $292 per tonne in the port of Paranagua and American Bay corn at US $285 per tonne, according to the International Grains Council.

Brazilian corn exports rose in February from a year earlier, but fell month-on-month

Brazil exported 2.28 million tonnes of corn in February 2023, up nearly threefold from February last year and the highest volume for the same month since 2016, according to data released by the Secretariat for Foreign Trade (SECEX) on March 1. Brazil continued to export corn to China in February, and record corn production in 2022 helped boost exports year-on-year. China imported about 1 million tons of Brazilian corn in January since it opened its market to Brazilian corn last year.

It should be noted, however, that February's corn exports were well below January's 6.35 million tons, reflecting Brazil's drying up of old season corn supplies. Exporters will shift their focus to soyabeans before the second corn harvest hits the market.

Brazilian second season maize may be sown outside the ideal window

The survey by Safras & Mercado, a consultancy, showed that as of February 24, 14.9m hectares of second-season maize had been planted in south-central Brazil, equivalent to 39.1% of expected acreage, down from 52.4% sown at the same time last year and 48.7% below the five-year average. The Mato Grosso Institute for Agricultural Economics (IMEA) said 20 per cent of the state's second-season corn crop will be planted outside the ideal window as delays in the soybean harvest adversely affect corn seeding.

Despite planting concerns, private firms expect Brazil's corn crop to reach record levels. AgroConsult, a consultancy, expects Brazil's total maize production to reach a record 128.5 million tonnes in 2020/23, down from its January forecast of 130.9 million tonnes but still 8.6 per cent higher than a year earlier, with 29.4 million tonnes in the first season and 99.1 million tonnes in the second.

Consultancy Datagro expects Brazil's total maize production to be 128.65 million tonnes, 6.5% higher than last year, with second season maize production expected to be 102.91 million tonnes, 7.8% higher than last year. StoneX expects Brazilian maize production to reach 130.61 million tonnes, 7.1 million tonnes higher than earlier forecasts and up from 123.51 million tonnes a year ago.

Argentine corn is down and traditional customers are turning to Indian corn

Feed processors in Asia are increasing imports of Indian corn as a severe drought in Argentina reduces production in the traditional supplier. Importers in Malaysia and Vietnam booked about 200,000 tonnes of Indian corn in a month. The CIF price for Indian corn in Southeast Asia is about $310-315 / ton, while the South American corn is $330 / ton. Corn exports to Southeast Asia are expected to continue in the coming months due to ample supplies in southern India. Indian traders say supplies are plentiful in Karnataka, Tamil Nadu and Andhra Pradesh.