The CBOT corn futures JUL-23 contract price was 515.2 USc/56 bushel at the time of writing (25th May 2023), up 3.66% w-o-w. Corn prices closed higher this week due to adverse weather conditions on the US Corn Belt. The soil moisture remains insufficient, causing concerns in the market. Thus, traders are adding premiums to cover the possibility of heat damage. According to weather reports, most of the Corn Belt is expected to turn dry. Also, some light buying was seen in the market, thus supporting corn prices this week.
According to the USDA weekly crop progress report, as of 21st May, 81% of the 2023/24 US corn crop has been planted, up 16% w-o-w. As mentioned in the previous update, the market needs to see a clear and significant threat to the US 2023/24 crop to see a constant price rally.
In Brazil, the corn market is witnessing low liquidity. A trader told Mintec, “farmers are not willing to sell their products because the price has decreased significantly. However, a lot of corn and soybeans still need to be sold. In my region, less than 20% of the summer crop was sold. This is nothing compared to the last two-three years. Usually, at this time of the year, we would have 40-50% of the summer crop already negotiated.” According to market players, there could be a bottleneck at the Brazilian ports to export corn in H2 2023 since the market still has a large surplus of soyabeans that needs to be exported, and usually, soyabeans are exported in H1, which is not the case this year. A trader added, “in H2 2023, when most of the corn will enter the market, we will still have soyabeans in the ports. If the international market does not improve, then there will be more corn on the market, and as everyone knows, Brazil should have a record production this season.” The majority of the Brazilian farms will start corn (safrinha) harvesting during June and July. Currently, there is a bit of dryness in the state of Parana (the largest safrinha corn-producing state). A trader told Mintec, “dryness will reduce corn yield, but it won’t be catastrophic.”