Global feed market: Harvesting pressure and improved rainfall in South America weigh down corn prices

As of the week of October 27, 2023, global corn prices have experienced a comprehensive decline, mainly due to the advancement of corn harvesting in the United States, farmers accelerating sales, and favorable rainfall in arid regions of South America.

On Friday, the Chicago Board of Trade (CBOT) closed December corn futures at around $4.8075 per bushel, down 3% from a week ago; The price of Meiwan No.2 yellow corn for the November shipping schedule is $5.5475 per bushel, a decrease of 2.6%; The November corn season of Euronext, a pan European exchange, closed at around 201.75 euros per ton, down 2.2%. The FOB price for Argentine corn on the river is $225 per ton, a decrease of 9.3%.

Over the past week, international crude oil futures have been volatile, mainly driven by the Middle East conflict situation. The most actively traded West Texas Intermediate crude oil (WTI) contract on the New York Mercantile Exchange (NYMEX) closed at $85.54 per barrel in December, down 2.9% from a week ago. The global benchmark Brent crude oil for December was reported at $90.48 per barrel, down 1.82% from a week ago. This week, the ICE US dollar index closed at 106.38 points, up 0.37% from a week ago.

60% of US corn harvest completed

The Crop Progress Report from the US Department of Agriculture shows that as of October 22, the US corn harvest was 59% complete, unchanged from the same period last year and exceeding the historical average of 54%. The forecast released by the US government meteorological agency on Saturday shows that there will be widespread rain in the Midwest of the United States over the weekend, which may slow down corn harvesting operations (Figure 4).

Improvement in US corn export sales

The US Department of Agriculture's Export Sales Weekly Report shows that as of the week of October 19th, the net sales volume of corn in the United States was 1.37 million tons, higher than 890000 tons a week ago. The total sales of corn so far in 2023/24 is 17.53 million tons, an increase of 24.4% year-on-year. The export target of the US Department of Agriculture is 51.44 million tons, an increase of 21.9% year-on-year. From the perspective of export prices, US corn is currently slightly higher than Brazilian corn, but lower than Argentine corn prices. On October 26th, the FOB price for corn in Meiwan was $223 per ton, a decrease of 4.3% from a week ago; The quoted price for the Brazilian corn Paranagua port is $220/ton, a decrease of 4.8%; The price of corn on the river in Argentina is $240 per ton, a decrease of 4.8%.

Heavy rain improves prospects for corn in Argentina

The Buenos Aires Grain Exchange announced on Thursday that there was a significant increase in rainfall in Argentina's core agricultural production areas over the weekend, improving the yield prospects for the current season's corn crops (Figure 5). The Rosario Grain Exchange stated that there was 45.5 millimeters of rainfall over the weekend, easing farmers' concerns. The weekly report of Buenos Aires Grain Exchange shows that rainfall has helped farmland that has suffered from low-temperature freezing damage in recent days. Currently, over 76% of farmland is in good condition, compared to only 60% before. The corn planting area in 2023/24 has accounted for 22% of the planned area of 7.3 million hectares, compared to about 23% in the same period last year.

Private institutions expect a decrease in corn planting area and yield in Brazil in 2023/24

The survey released by private consulting firm Datagro this week confirms the trend of reduced planting area for first and second season corn in Brazil for the fiscal year 2023/24. The company expects Brazil's total corn production for 2023/24 to be 1244.35 million tons, a decrease of 9% from the record high of 1361.09 million tons in 2022/23. The main reason is that the total corn planting area will decrease to 22.211 million hectares, a decrease of 4% year-on-year. The estimated area of corn for the second season is 18.004 million hectares, a decrease of 3% year-on-year. Considering normal weather, the predicted corn production for the second season is 98.228 million tons, which is 9% lower than this year's 10824.5 million tons. The international sowing area of corn in the first season was 4.207 million hectares, a year-on-year decrease of 6.6%. The estimated corn yield in the first season was 26.07 million tons, a 6% decrease from the damaged yield of 27.864 million tons in 2023.

Consulting firm AgRural announced on Monday that as of October 19th, the progress of corn planting in the first quarter of 2023/24 in central and southern Brazil was 46%, up from 41% a week ago and 51% in the same period last year.

Brazil's corn exports for October further reduced to 8.24 million tons

The Brazilian Association of Grain Exporters (ANEC) stated that the estimated corn export volume from Brazil in October was 8.24 million tons, lower than last week's estimate of 8.5 million tons. If the prediction becomes reality, it will still be 33.5% higher than the export volume in October last year. Brazilian brokers reported that the prices of corn and pork in China have fallen, resulting in a slight decrease in demand for Brazilian corn; In addition, the decrease in water levels in the Amazon River has led to serious logistics problems at the northern arc ports, which explains why the Brazilian National Association of Grain Exporters (ANEC) has lowered its corn export forecast for October this week.

EU crop monitoring agency lowers EU grain corn yield expectations

On Monday (23rd), the European Union's crop monitoring agency MARS released its monthly report, lowering its forecast for the yield of grain corn in the EU for 2023/24, as the warm and dry autumn weather exacerbated drought in southeastern EU countries.

MARS predicts that the yield of grain corn in the EU this year will reach 7.13 tons per hectare, lower than last month's forecast of 7.26 tons per hectare, 5% lower than the average yield of the past five years, but 21% higher than 2022, which suffered from severe drought.

Last month, MARS lowered its EU corn yield forecast due to drought in Romania and Bulgaria, while Greece suffered from flooding earlier.

On Thursday (26th), the European Commission expects the currently harvested corn production to be 59.86 million tons, higher than the 53.12 million tons affected by last year's drought. The estimated import volume of corn is 20 million tons, lower than the previous year's 26 million tons.

The European Commission has also lowered the EU barley production for 2023/24 to 47.5 million tons, a 12 year low and a decrease of 900000 tons from September, due to dry and hot weather in Spain and the Scandinavian Peninsula. The forecast for EU barley imports has been raised by 200000 tons, from last month's forecast of 1.5 million tons to 1.7 million tons, but still lower than last year's 2 million tons.