Porto Alegre, September 2, 2024 – The 2024 US crop is in the maturation phase. At this stage, the lack of rainfall and the heat have little or no influence on productivity. Therefore, it is difficult to affect production to reverse the current price scenario. However, indicators such as wheat and oil prices and lower Brazilian competitiveness in corn exports can help Chicago avoid further pressure on prices, even with the harvest approaching.
While waiting for the start of the US harvest in mid-September, the market is trying to find factors to remove prices from the historical average reference of USD 3.70/4.00/bushel on the CBOT. One of the indicators that establish this expectation is weekly exports. August closed with a good number in weekly sales of the new crop, 1.5 mln tons. This accumulation of good weekly sales from now on may or may not change the USDA’s forecast for the new business year in exports, currently projected at 58 mln tons.
Some factors are helping US sales at this time, such as:
– Ukraine is having some difficulty in exporting its production volume at this time due to the large volume of wheat that is being shipped through restricted local ports;
– US corn is very competitive at low prices or the historical average, and this attracts importers to its market;
– Argentina has already made its largest volume of commitments for 2024 and does not have much availability to the point of competing with cheaper US corn;
– Brazil, as we have already pointed out, has corn that is more expensive than US corn by at least USD 20/ton. However, it still serves some preferred markets that are still willing to pay more for Brazilian corn. However, some large buyers, such as Japan, for example, tend to opt for US origin from now on due to this price differential. Therefore, Brazil still maintains a regular sales volume, well below 2023, with the US increasing its volumes due to competitive prices;
– Finally, the depreciation of the dollar tends to help US exports from now on. In this environment, the international corn market needs new facts to try to move back above USD 4.00/bushel. The price of oil, which influences ethanol prices, the levels of wheat in the Black Sea after the region’s harvest, and the crop in South America are variables that will also bring some volatility to markets from now on.
Safras News