Porto Alegre, November 28, 2023 – Even without China, which announced purchases of Ukrainian corn last week, US exports are beginning to find a better weekly flow. It is clear that the withdrawal of Brazilian supply and the absence of Argentina until March, at least, offer space for better US sales. With the completion of the local harvest, the preponderant factor, from now on, will really be the flow of US exports and its effect on local ending stocks. Prices on the CBOT continue to align with the lows of the December contract.
The seasonality of Brazilian exports reveals that US exports will have room to advance in good volumes. Brazil will have Rio Grande do Sul’s crop, regular until now, to be reaped from next January as the last major volume supply and that will be able to meet some demands from importers until the arrival of the Argentine crop. After this supply, Brazil will only return with major volumes from July/24.
Argentina’s planting, in turn, is approaching 40% and progressing well. Rains have occurred routinely in producing regions, and there is no stress with the initial crop development. This positive view of the Argentine crop is reflected in the export registrations for the 23/24 crop, which has already reached 5.4 mln tons. A strong initial sales pace for a crop that is still being planted. This is a sign of how the country will position itself in the international environment, that is, strong selling pressure should affect premiums at ports, including Brazilian ports for the start of the 2024 crop.
The possibility of a record crop in Argentina, with almost 55 mln tons, suggests strong export pressure between April and October, the period in which the Brazilian crop will be reaped. World demand, naturally, will have the return of the world’s third-largest exporter, which will be able to place 35 to 40 mln tons in the global market. When Brazil resumes its harvest, regardless of the size of Brazil’s 2024 crop, it will encounter pressure from the Argentine supply in the external environment.
For now, Brazil will begin to reduce its shipment flow from this month onward and leave room for the United States to regain a higher volume of sales. Last week, weekly sales reached 1.43 mln tons, a good volume for the period. China reports a record crop, but, at the same time, has strong purchases of Brazilian corn, which already exceed 10 mln tons this year, and announced purchases from Ukraine last week. It seems something is conflicting between the profile of the announced Chinese crop and the flow of corn trade to this destination. What is certain, so far, is China’s attempt to stay out of US purchases. The emergence of some volume of purchases of US corn could be an indicator of recovery for corn prices on the CBOT. Premiums in Brazil with a strong rise and Argentina with harvests only starting in March open up this type of possibilities for the USA and for prices on the CBOT.
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