Porto Alegre, May 31th, 2024 – While wheat finds room for a price rally on the CBOT due to the Black Sea situation, the US crop remains very well planted and in a perfect window. Therefore, despite the rise in wheat, corn has not been able to keep up with the movement and continues to be limited to a price range on the CBOT. However, US exports have performed well, and it would not be a surprise if USDA raised its export projection for the business year again, cutting the current stocks. The arrival of Brazil again with its second corn crop could be a point of balance.
The international corn market tried to gain some support in May, following the situation in the Black Sea. The apparent intensification of the war between Ukraine and Russia, Europe’s attempt to impose more economic sanctions on Russia, as well as the climate situation in the Russian and Ukrainian wheat crop brought a strong rally for wheat. Wheat went from USD 5.50/bushel to more than USD 7.00/bushel this month. This movement alone reflects this picture of the Black Sea. The issue is that both Russia and Ukraine will still start reaping from June and July, a seasonality that could force prices down again.
Corn continues to accumulate between USD 4.40 and 4.80/bushel, with the December maturity trying to break the barrier of USD 5.00. Erratic information about crops in Argentina and Brazil also makes external prices a little more speculative. Excessive cuts in both countries, even in official numbers, give the impression that South America will have little supply in the coming few weeks, and this situation is not real. Exports from the United States, however, have been very good, approaching one mln tons per week and accumulating 49 mln tons in the business year. USDA projects 54.6 mln tons for the business year that will be closed at the end of August. That means practically 13 weeks, and if sales continue at 1 mln tons a week, USDA will have to increase the annual projection, with a consequent cut in the old-crop stocks. This is what we have in terms of potential price support until the new crop begins.
The US planting reached 70% last week, perfectly within the window. It is clear that the detailed market analyses of the US crop impose assessments that end up having different effects on production potential. With rain a little above expectations in Iowa last week, the planting may still depend on the last week of May for its completion. However, the other states had normal rainfall and may have already closed work in the last few days. For June, there is no sign of weather problems that could interfere with the development environment of local crops. July will be the key month for corn pollination and silking in the 2024 crop.
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