Porto Alegre, December 18th, 2024 – The December report from the United States Department of Agriculture (USDA) focused on adjusting demand projections for corn. With the final crop report in January, production data must be adjusted next month. The cut in US stocks was a consequence of the sales flow of the current business year, well above last year’s pace. Now, the projections are more adjusted to reality, and the market will follow the weekly export pace to assess stocks for the end of the business year. This stock revision and a downward bias for soybeans already provide us with a clear signal for the planting of the 2025 US crop, that is, readjustments in the corn area, with the resumption of cuts in the area to be planted with soybeans.
US corn exports totaled 35.1 mln tons between September and the beginning of December. These sales are now 8 mln tons above the same period of the last business year. The market expected a downward correction in stocks due to this strong export flow. USDA had been projecting 59 mln tons for the year, compared to 58 mln tons in 23/24. The increase brought 62.9 mln tons, that is, a good realignment of the annual projection in view of a strong weekly pace.
Moreover, the US domestic demand projections were more conservative from the beginning. The report brought small corrections to the projections for the year. In other words, it was a report correcting the projections for general demand. The consequence was a cut in final stocks for the business year, from 49 to 44.1 mln tons. This is not a subtle adjustment of stocks that would harm local or global demand, which is why prices did not jump after the report.
However, it is clear that this adjustment puts some pressure on the 2025 crop. The 2024 crop was perfect in terms of productivity and compensated for much of the significant cut in planted area. Two perfect crops in succession are rare in the United States. Therefore, we must understand that if the same area as in 2024 is maintained, climate change could result in a crop that is not as exciting as in 2024 and maintain modest stocks for 2026. Thus, we have again the possibility of an upward correction of the planted area in corn, by 1 to 2 mln acres, and a proportional cut in the soybean area. Of course, we still have the 2025 South American crop to be defined, which has a strong impact on the global environment of soybeans, and must still pay attention to the weather in January and February.
Therefore, maintaining a firmer corn price curve for the first half of the year, at USD 4.40/bushel or above, seems natural given the profile of US exports, the focus on the US climate for 2025, and the Argentine crop scenario. The Argentine crop is in excellent condition, but with planting not yet completed (at only 60% of the cultivated area). Rainfall was regular in the first half of December in Argentina, and there is no clear sign of any serious problem so far (no need for replanting, for example). Leafhoppers are present in the north of the country, but the pest has been controlled by producers so far. Production potential remains at 51 mln tons for Argentina.
As for Europe and Ukraine, small adjustments were made to the USDA supply and demand framework, without profoundly changing the local price environment and trends. However, of course, Europe will depend heavily on Argentina in the first half of the year, given Brazil’s absence and Ukraine’s export conditions. Expectations for January include the new US government’s attempt to establish a truce in the Black Sea and/or end the war if possible. This will impact trade resumption, with fewer risks for wheat, corn, sunflower oil, fertilizers, and fuels.
Finally, USDA adjusted the number of potential imports from China to 14 mln tons, now more in line with the Chinese government’s figures. The production figure was not changed by USDA, but was slightly reduced to 295 mln tons by the Chinese government. In any case, China is well positioned in terms of imports this year.
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