Global grain markets: Weaker export prospects hampered higher corn prices

 

The Chicago Board of Trade (CBOT) December 2022 corn futures closed at around $6.
81/bu on Friday, up 0.
04%
from a week ago.
Spot price for Gulf of America 2 yellow corn for the November shipment was $8.
4850 per bushel, up 2.
8 percent
from a week ago.
EURONEXT exchange's March 2023 corn futures closed at around 333.
50 euros/mt, up 0.
1%
from a week ago.
Argentine corn was quoted at $307/mt FOB in Shanghe, up 0.
7 percent
from a week ago.

 

International crude oil futures rose for the third straight week this week, helping to boost the outlook
for biofuels demand.
The New York Mercantile Exchange (NYMEX) West Texas Intermediate (WTI) contract for December closed at $92.
61 a barrel, up 5.
4 percent from a week ago and the third straight week of gains
.
The global benchmark January Brent crude futures were at $98.
57 a barrel, up 5.
1 percent
from a week ago.

 

The U.
S.
corn harvest is nearing its end, and the pace of exports remains slow

 

The USDA's weekly crop progress report shows that the U.
S
.
corn harvest continues to outperform the historical average for the same period.
As of Oct.
30, the U.
S.
corn harvest was 76 percent, compared with 73 percent a year ago and a five-year average of 64 percent
.

 

With corn on the market, the U.
S.
is entering peak export season, but low water levels in the Mississippi River continue to hamper the most efficient route
to U.
S.
grain shipments to the Gulf export hub.
This year's chronic lack of rainfall in the Midwest has caused water levels in the river to plummet, and barge costs have soared to record highs
.
However, meteorological agencies are forecasting two rains in the upper Midwest next week, which will help raise river water levels and lead to lower
barge freight rates.

 

USDA's weekly export sales report showed that net U.
S.
corn sales in 2022/23 were 370,000 mt in the week ended Oct.
27, up from 260,000 mt a week ago, but well below the same period over the past few years (1.
22 million mt in the same period in 2021, 2.
61 million mt in 2020 and 489,000 mt in 2019).

 

Year-to-date U.
S.
corn export sales, including exported and unloaded contracts, were 14.
47 million mt, down 53.
3%
year-on-year.
Among them, sales to China were 3.
49 million tons, down 70.
8%
year-on-year.
Tensions between China and the United States have prompted China to diversify its supply and cut demand for
U.
S.
corn.

 

China is about to import corn from Brazil

 

Chinese customs released a new list on Wednesday (Nov.
2) that more than 130 Brazilian companies have been allowed to export corn to China, meaning Brazil will be able to start exporting corn
to China.
Terminals approved to export corn to China include Santos, Paranagua and Itaki ports
.
Brazilian agriculture ministry officials said about 600 companies applied to the Brazilian agriculture ministry for certification
to export corn to China.
It is still under approval and a new list
will be announced between December and January.
Brazil signed an import quarantine advisory with China in May, initially considering exporting corn
harvested in 2022/23 to China.
But with abundant corn supplies in Brazil, the two countries agreed in August that they could inspect 2021/22 corn directly at ports and warehouses, rather than tracking it
from the farm.
Since then, Brazil's Ministry of Agriculture has begun accepting applications
from companies exporting corn to China.
China still requires Brazil to certify that maize is not contaminated
with the 18 pests listed in the Protocol.

 

The USDA expects China's corn imports to be 18 million mt in 2022/23, down 18.
2 percent
from 22 million mt in 2021/22.
Given geopolitical risks and logistical chain difficulties, China has sought to reduce its dependence on
U.
S.
supplies.
Brazil's corn production is expected to reach record levels
this year.
StoneX this week expects Brazil's total corn production in 2022/23 to reach a record 129.
9 million mt
.

 

Brazil's corn exports totaled 31.
8 million mt from January to October 2022, up 119.
3% year-on-year and exceeding the 20.
6 million mt
exported for the whole of last year, Brazil's National Association of Grain Exporters (ANEC) said Nov.
3.
Among them, exports in October were 6.
24 million tons, well above the 1.
87 million tons
in the same period last year.

 

U.
S.
corn ethanol production capacity declined

 

U.
S.
ethanol capacity was 17.
152 billion gallons in August 2022, down from 17.
291 billion gallons in July and 17.
408 billion gallons
in August 2022, according to data released by the U.
S.
Energy Information Administration on Monday (Oct.
31).

 

The U.
S.
biofuels industry consumed 24.
12 billion pounds of corn in August, down from 24.
966 billion pounds in July but up from 23.
343 billion pounds in August, and 466 million pounds of sorghum in August, up from 418 million pounds in July and 30 million pounds
in August last year.

 

The EPA is considering expanding E15 gasoline sales in the Midwest

 

The U.
S.
Environmental Protection Agency (EPA) plans to seek public comment on whether to allow year-round sales of E15 ethanol gasoline in Midwestern states because it would help ease gasoline price pressures and boost farmers' incomes
, the sources said.

 

The U.
S.
ethanol industry wants to increase sales of this biofuel with a high ethanol content and lower gasoline prices
by expanding fuel supplies.
The U.
S.
has previously restricted sales of E15 fuel because of concerns about air pollution
.
However, studies say that fuel containing 15% ethanol may not increase smog
compared to E10, which can be sold year-round.

 

In April, the governors of major corn-producing states in the Midwest, including Iowa, Nebraska and Illinois, asked the EPA to lift the ban
on the sale of E15.

 

Next week's supply and demand report could raise U.
S.
corn production

 

On Wednesday (Nov.
9), the USDA will release a supply and demand report, and most people believe that US corn production may be revised
down slightly.

 

However, well-known analyst Informa believes that U.
S.
corn production may be revised up to 13.
981 billion bushels, 0.
88 billion bushels higher than last month's forecast, and yields may increase to 172.
9 bushels per acre, up from 171.
2 bushels per acre
forecast last month.
StoneX expects U.
S.
corn production forecasts for 2022/23 to be raised to 14.
109 billion bushels, with yields forecast at 174.
5 bushels/acre
.
For comparison, last month the company forecast corn production of 14.
056 billion bushels and a yield of 173.
9 bushels per acre
.