Global feed grain market: U.S. corn prices were contained by weak export demand

 

Chicago Board of Trade (CBOT) March 2022 corn futures closed at about $6.
4625/bu on Friday, down 3.
7%
from a week ago.
The spot price of Meiwan 2 yellow corn for December shipping was $7.
5725 per bushel, down 3.
1% from a week ago; March 2023 corn futures on the EURONEXT exchange closed at around 294.
5 euros/mt, down 3.
1%
from a week ago.
FOB quotations for Argentine corn on the upper river were $301/mt, up 1.
0%
from a week ago.

 

International crude oil futures rose between 2% and 5% this week, ending a three-week losing streak
.
The West Texas Intermediate (WTI) January contract on the New York Mercantile Exchange (NYMEX) closed at $79.
98 a barrel, up 4.
9 percent
from a week ago.
Brent crude futures, the global benchmark, for February, were at $85.
57 a barrel, up 2.
3 percent
from a week ago.

 

U.
S.
biofuel demand outlook

 

The U.
S.
Environmental Protection Agency (EPA) on Thursday released its biofuel blending plan
for the next three years.
For the ethanol industry, the blending of traditional biofuels (corn ethanol) is 15 billion gallons in 2023 and 15.
25 billion gallons
in 2024 and 2025, respectively.
An additional 250 million gallons will be added in 2023 to compensate for unblended quantities
from previous years.

 

EPA expects U.
S.
corn ethanol consumption to be 14.
455 billion gallons in 2023, 14.
505 billion gallons in 2024, and 14.
534 billion gallons
in 2025.
In addition, the United States is expected to consume 110 million gallons of imported sugarcane ethanol and 25 million gallons of domestically produced advanced ethanol
annually.
Given that corn ethanol consumption is approximately 14.
5 billion gallons, approximately 750 million gallons of non-ethanol equivalent of non-ethanol renewable fuel are required to meet the 15.
25 billion gallon conventional renewable fuel blending requirement
.

 

Year-to-date, U.
S.
corn export sales down 48.
4% year-on-year

 

US net corn sales in 2022/23 were 633,000 mt (603,000 mt in 2022/23 and 30,000 mt in 2023/24), down from 1.
85 million mt (1.
85 million mt + 630,000 mt)
the week ended Nov.
24, according to the USDA's weekly export sales report.
Year-to-date, total U.
S.
corn export sales, including exported and unshipped contracts, were 18.
35 million mt, down 48.
2% year-on-year and down 48.
4%
year-on-year the week before.
The USDA forecasts U.
S.
corn exports for the year to be 54.
61 million mt, down 13% year-on-year, mainly due to high U.
S.
corn prices and a sharp drop
in exports to China and Mexico.
So far this year, U.
S.
corn sales to China totaled 3.
5 million tons, down 70.
8%
year-on-year.
The U.
S.
Department of Agriculture expects China to import 18 million tons of corn this year, down 17.
7%
year-on-year.

 

China's grain import demand peaks?

 

According to data from the General Administration of Customs, China imported 550,000 tons of corn in October, down 58% year-on-year; Imports of barley were 340,000 tons, down 74% year-on-year, and sorghum imports were 610,000 tons, down 34%
year-on-year.
The USDA forecasts that China will import 18 million mt of corn in 2022/23, down from 21.
9 million mt
the previous year.
But Dan Bass, president of AgResource in Chicago, and other analysts believe China could import only 15 to 16 million tons
of corn this year.
Bass believes China's feed grain use will be lower than in previous years, as domestic pig farmers may return to swill, and recently rotated 30 million tonnes of broken rice and low-quality wheat stocks through auctions, as well as declining hog stocks
.
Even though feed import demand may increase for the remainder of the year, it may not be met
by U.
S.
corn.
Brazil signed a phytosanitary agreement with China in May, removing obstacles to Brazilian corn exports to China; The Brazilian Association of Grain Exporters (ANEC) predicts that Brazil will export 5 million tons of corn
to China in 2023.
Now corn prices in both Ukraine and Brazil are cheaper
than corn in the United States.
Bass believes that if the 2023 South American corn harvest is good, corn prices could fall
in the next 18 months.
This does not bode well for other grain prices, as corn is the leader in feed prices
.

 

The USDA's quarterly November agricultural exports report released this week also lowered the amount of U.
S.
agricultural exports for fiscal 2023, as lower exports of soybeans, cotton and corn were partially offset
by higher exports of beef, poultry and wheat.
Cereal and feed exports are expected to be $46.
2 billion, down $300 million from August, as exports of maize, sorghum and rice decline.

U.
S.
corn exports are expected to be $18.
5 billion, down $600 million
from August.
U.
S.
agricultural exports to China in fiscal 2023 are expected to be $34 billion, down $2 billion
from the August forecast.

 

Brazil's corn production is set to hit a record high, and exports are surging

 

On Dec.
1, consultancy StoneX raised its 2022/23 corn production forecast to 130.
3 million mt, up from a previous forecast of 129.
9 million mt, and raised Brazil's 2021/22 corn exports to 45 million mt, up 3 million mt from an earlier forecast of 42 million mt, as Brazil began selling corn
to China.
StoneX forecasts Brazil's corn exports for 2022/23 to reach 46 million mt
.
On the same day, consultancy Datagro estimated Brazil's corn production in 2022/23 to reach 126.
30 million tonnes, up 6%
from the all-time high of 119.
65 million tonnes in 2021/22.

 

Brazil's corn exports were 6.
06 million mt in November, up from 2.
39 million mt
in November, according to data released by Brazil's Foreign Trade Secretariat (SECEX) on Dec.
1.