Global feed market: Improved spring sowing conditions in the US, bumper corn crop in Brazil in sight

Global corn prices fell in the week ending April 7, 2023, mainly due to the start of spring sowing in the United States. The weather in the Midwest is expected to be warm and dry, helping the sowing process to proceed further. The absence of Chinese buyers this week, following three weeks of U.S. corn buying, raised estimates for Brazil's corn crop. But international crude oil futures continued to rise and the dollar retreated, helping to limit losses in the corn market.

On Thursday, May corn futures on the Chicago Board of Trade closed at $6.4350 a bushel, down 2.6 percent from a week earlier. Mei Wan 2 yellow corn for April shipment was quoted at $7.35 a bushel, down 2.5 percent from a week ago. June corn futures on EURONEXT traded at 247.75 euros a tonne, down 3.9 percent from a week ago. The FOB price for Argentine corn in Shanghe is $301 / ton, up 1.3% from a week ago. International crude oil futures rose for a third straight week this week as the Opec alliance announced further production cuts and US crude inventories fell. But worries about the global economic outlook limited gains. West Texas Intermediate crude for May delivery, the most actively traded contract on the New York Mercantile Exchange, was at $80.70 a barrel, up 6.7 percent from a week ago. Brent crude for June delivery, the global benchmark, closed at $85.12 a barrel, up 6.6 percent from a week earlier. The ICE dollar index closed Friday at 101.585, down 0.7% from a week earlier.

Spring sowing has begun in the United States, and traders are keeping a close eye on weather conditions in the corn belt. Weather forecasts for the next two weeks show warmer, drier weather in the U.S. corn belt, helping the spring planting effort. U.S. corn plantings were 2 percent complete as of April 2, in line with a year earlier and the five-year average, according to the first national crop progress report of the year released Monday by the U.S. Department of Agriculture. U.S. corn acreage is estimated to be 92 million acres in 2023, up 3.42 million acres, or 4%, from a year earlier, according to the USDA Planting Intentions report.

U.S. net corn sales for 2020/23 in the week ended March 30 were 1,246,600 tons, 20% higher than the previous week but 26% below the four-week average, according to the weekly USDA export sales report. Net sales volume for 2023/24 was 26,200 tonnes compared with 21,800 tonnes a week ago. Year-to-date US corn export sales totaled 37.21 million tons, down 31.6% from 54.44 million tons in the same period last year, compared with 33.0% lower last week and 34.1% lower two weeks ago. Total U.S. corn sales (shipped and unshipped) to China so far in 2020/23 are 8.1 million tons, down 33.1 percent from a year ago, compared to 38.0 percent in the previous week and 44.0 percent two weeks ago.

Notably, Chinese buyers were conspicuously absent from a one-day report on U.S. export sales this week, suggesting that the buying spree unleashed by Chinese buyers in the last three weeks of March has fizzled. In the three weeks ended March 31, Chinese buyers bought 3.27 million tons of U.S. corn, all for delivery by the end of August 2023. The USDA announced two single-day sales this week, 150,000 tons to Mexico on Monday for delivery in 2023/24 and 125,000 tons to unknown destinations on Wednesday for delivery in 2020/23. Given that corn prices in the U.S. are no longer cheap and the outlook for Brazil's corn crop is positive, a slowdown in purchases by Chinese buyers is expected. According to the International Grains Council, as of April 5, FOB U.S. corn was quoted at $298 a ton in the Gulf, Brazilian corn was quoted at $288 at the port of Palo Agua and Argentine corn was quoted at $301 a ton in Shanghe.

Safras & Mercado this week forecast Brazil's 2020/23 second-season maize crop to reach a record 92.2 million tonnes, up from its January forecast of 87.7 million tonnes, mainly due to increased acreage in Mato Grosso state. The company's production forecast is based on normal weather conditions and takes into account a delay in second season corn seeding due to a late soybean harvest. If the latest production forecast materialises, it would represent a 9.2 per cent increase over last year's harvest of 84.4 million tonnes. Brazil's total maize production in 2020/23 is likely to reach a record 130.29 million tonnes, up from a January forecast of 125.3 million tonnes and up from 120.23 million tonnes in 2020/22.

StoneX this week cut its forecast for Brazil's 2020/23 second maize crop to 100.54 million tonnes, down from 130.6 million tonnes forecast last month. But the forecast for total corn production was raised to a record 131.34 million tons, up from 130.6 million tons predicted last month and 123.51 million tons last year, as first-season corn production was higher than expected. The company expects Brazil to produce 28.6 million tons of corn for the first season of 2020/23, up 3.8 percent from its March forecast, as conditions improve in southern states. StoneX lowered its second season corn acreage estimate, mainly due to lower second season corn acreage in Paranal state, due to planting delays resulting in the wrong planting window and lower acreage and yield per unit area than previously anticipated. But with a more favorable outlook for the second crop in the states of Mato Grosso, Sao Paulo and Para, this month's cut is modest and still 6% higher than the previous year. StoneX has revised Brazilian maize exports up by 1m tonnes to 48m tonnes in 2020/23, up from 46.63m in the previous year. Given the problems facing Argentine corn, the unpredictability of Ukraine's export prospects and a deal with China to export Brazilian corn, this is helping to stimulate international demand for Brazilian corn.

Brazil's 202/23 second corn crop was 99 percent planted as of March 30, up from 96 percent a week earlier but down from 100 percent a year ago, consultancy AgRural said on Monday. At the end of March, some farmers in south-central Brazil were still in the field planting second season maize. The soybean harvest was delayed due to rain delays, and the second-season corn area was sown outside the ideal window above normal. The yield of corn in the second season is about 75% of the total national corn output, and the sown area is basically the same as that of soybeans.