The United States lost the title of No. 1 corn exporter to Brazil last year when the South American country harvested a breakthrough crop, just months after China gave the green light to Brazilian corn imports.
As such, Chinese interest in U.S. corn has slowed significantly in the past year or so, but Brazil’s next corn harvest is expected to be smaller than its recent one, potentially allowing plentiful U.S. supplies to regain share in global trade.
Prolonged dryness in the United States this year prevented what surely would have been a record corn harvest, though plentiful acres still allowed the 2023 crop to rise 10% on the year, approaching all-time highs. This should restore comfortable U.S. supply levels.
However, crop ideas for Brazil and China in 2023-24 vary across the industry. The U.S. Department of Agriculture on Thursday maintained 2023-24 Brazilian corn production at 129 million metric tons, identical to the initial May projection. That is down from a record 137 million tons in 2022-23.
But Brazil’s crop agency Conab on Tuesday set its initial outlook for the upcoming corn crop at 119.4 million tons, down from a reported 131.9 million in 2022-23. Conab cited a drop in corn planted area as farmers find soybean prices relatively more attractive, and the El Nino weather pattern could limit yields.
Conab predicts Brazil’s second corn harvest, which supplies the country’s exports, could fall nearly 11% on the year to 91.2 million tons. But the second crop will not be planted until early 2024 after soybeans are harvested, enough time for things to change.
China, like the United States, is winding down its 2023-24 corn harvest. China’s agriculture ministry on Thursday forecast a record crop of 288.2 million tons, up 1% from the last outlook but 4% more than last year. However, USDA on Thursday left this number unchanged at 277 million tons.
The actual outcomes could impact trade flows and export shares, though there may not be a significant misjudgment in upcoming corn supplies when combining Brazil and China. USDA’s comparatively light Chinese corn outlook is somewhat offset by its bigger Brazilian number.
TRADE SHIFT?
A bumper Chinese corn crop might in theory reduce the country’s need for imports, but good information on China’s corn stocks, including both quantity and quality, is largely inaccessible to global market participants.
Additionally, Chinese buyers sometimes find imports cheaper than domestic supplies whenever global prices weaken, further complicating China’s possible intentions.
China’s agriculture ministry says corn imports for 2023-24, which started Oct. 1, will total 17.5 million tons, down from 18.5 million in the prior season. USDA’s outlook is 23 million tons for 2023-24, also starting Oct. 1.
Comparing trade forecasts can be tricky since local marketing years are different in the Northern and Southern hemispheres. On an October-September basis, USDA sees 2023-24 Brazilian corn exports at 59 million tons versus 53.7 million in 2022-23, and U.S. shipments are pegged at 52.5 million tons in 2023-24 versus 43 million in 2022-23.
Conab forecasts a 27% decline in Brazil’s corn exports for the 2023-24 year starting in February 2024, favoring strength in domestic use and noting the strong U.S. harvest. The 2023-24 outlook of 38 million tons compares with 52 million this year, though this could represent an overly conservative view on Brazil’s share of world corn trade.
U.S. corn sales for 2023-24 are currently battling the huge 2022-23 Brazilian crop, but a slide in prices, if realized, could lift U.S. exports in the coming months. USDA projects the average corn price received by U.S. farmers in 2023-24 will fall to $4.95 per bushel from $6.54 last year.
Beyond China, U.S. exporters will look to capture other top corn buyers like Mexico and Japan, both of which have been increasing trade with Brazil. However, Mexico’s booking pace of U.S. corn is record-fast so far in 2023-24.
Source: Reuters
