Porto Alegre, March 26, 2024 – As we have pointed out in our latest editions, the bias for the US planting in the 2024 summer crop is a cut in the corn area and an increase in the soybean area. This volume of transition between one culture and another is the market’s doubt. One piece of data that found market consensus last week was the corn area of 91.8 mln acres compared to 94.6 mln acres in 2023. It is still a good corn area, which, with a climate condition close to normal, could bring a good crop again in 2024. Prices below USD 4.00/bushel in the second half of the year? It seems possible as long as the weather in the summer develops in good conditions. From the 28th, the 2024 “weather market” season will begin.
US weekly shipments and sales are slightly better, averaging one mln tons or slightly above. This movement confirms the better flow of buyers to the United States given Brazil’s weak export capacity in the first half of the year, low FOB prices, and the off-season. For now, it is the only positive point for prices on the CBOT, which have basically stabilized between USD 4.40 and 4.80/bushel on the future curve.
Narrowing issues in the Black Sea helped wheat find some support near USD 5.50/bushel, also helping corn resist further lows. The point is that the winter crops in Ukraine and Russia in 2024 promise to be significant again and, despite the war, tend to be a fundamental issue for regional prices. Ukraine will need to flow corn from the 2023 crop to find space for its record 2024 wheat crop. Regional pressures continue to limit the recovery of wheat and corn on the CBOT.
On the 28th, USDA will release its Planting Intention survey for the 2024 US crop. The bias seems already known to everyone. The doubt lies in the volume of transition area between cultures. In the case of corn, 94.6 mln acres were planted in 2023, and now the consensus seems to be around 91.8 mln acres. Nothing that the market has not yet priced, as with this expected area it will still be possible to produce close to 385 mln tons in 2024 under normal weather conditions. The big surprise will come if the area falls below 91 mln acres or goes above 93 mln acres. At the bottom, prices may increase on the CBOT. At the upper cut, there is a quick possibility of prices losing the level of USD 4.00/bushel.
After the report, the market will focus on the climate for planting in the Midwest, which will begin after April 20 depending on weather conditions. There is no problem in the Midwest or Plains states for advancing corn planting due to local winter conditions. The winter was not so harsh as to bring excess moisture due to the melting of ice in the north of the region. The only issue to be assessed is the spring rainfall regime. We must appreciate that the rapid climate transition from El Nino to La Nina is expected to significantly modify short-term climate forecast models.
Meanwhile, Argentina is advancing in its initial harvest phase, which has been paralyzed in recent days due to rain. Once again, an international news agency drastically announced the high risk of “devastation” of the Argentine crop due to storms in producing regions, helping some price rally this week. The storms did occur but were more concentrated in northern Buenos Aires and Entre Rios. Of course, as occurs in any year, these storms cause isolated crop losses and may bring some new numbers to the local crop. However, there is nothing that can change the trajectory of international corn and soybean prices. The other situation that the market seems to be betting on is an excess of rain in April, the most intense harvest period in Argentina. According to current expectations, the first fortnight should have regular rain, but not intense in the producing regions, therefore, allowing for a normal harvest.
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