Chicago Board of Trade Market News
Outlook: Corn futures are ¼-cent (0.1 percent) higher than last Friday but down 10 ½ cents (2.1 percent) from the last Market Perspectives report as holiday-reduced trading volume and improved South American weather pressured markets. Holidays in the U.S. and Brazil last week limited trading volume with market participants generally content to maintain current positions. That light-volume trade was coupled with improvements in the South American weather forecasts that took away some of the “weather premium” that traders previously bid into futures. Corn futures have strengthened over the past two days, however, on strong U.S. export sales and worrying heat building over central Brazil.
U.S. export sales for the week ending 23 November were up 35 percent from the prior week with 1.996 MMT of gross sales. Exports were down from the prior week at 0.499 MMT but put YTD exports at 7.621 MMT, up 32 percent. YTD corn export bookings (exports plus unshipped sales) are up 33 percent at 24.458 MMT, due largely to surging demand from Mexico and Japan. Mexico’s export bookings total 12.0 MMT (475.2 Mbu) and are up 32 percent YTD while Japan has committed to import 3.226 MMT (127.0 Mbu) of corn, a volume 117 percent larger than this time in 2022.
Corn is not the only grain experiencing a sudden demand surge as sorghum export commitments are also sharply higher this year. Last week saw gross export sales of 186.5 KMT (up 33 percent from the prior week) along with 280.6 KMT of exports (up 143 percent week-over-week). YTD sorghum exports are up 789 percent at 907.6 KMT with YTD bookings up 872 percent at 3.47 MMT.
Challenging weather in Brazil continues to support world grain markets as less-than-ideal conditions threaten both the first corn crop (currently being seeded) and the outlook for planting the second (safrinha) corn crop. While weather forecasts improved over the past few weeks and Brazil and Argentina received beneficial showers, the current outlooks are more concerning. The latest forecasts call for unusually hot temperatures and low rainfall for central and northern Brazil while northeast Argentina and southern Brazil will see heavy rains that will exacerbate already soggy conditions. Private analysts are already paring back 2023/24 production expectations for both countries.
The U.S. 2023 corn harvest is essentially finished with USDA reporting 96 percent of fields have been harvested through Sunday. Delays still exist in the Great Lakes states (notably Michigan) where rains have prevented fieldwork but there are essentially no concerns for the 2023 national yield or production. The conclusion of harvest has helped support basis levels, which are up 4 cents/bushel this week at -19H (19 cents below March futures). Current basis levels are well below last year’s five-year highs and the 5-year average but have been trending higher since early October. With harvest concluded and export demand increasing, the outlook is for gradual strength to enter the corn market (both cash and futures) and boost values in-line with seasonal trends.
Results from the second year of the U.S. Grains Council’s Corn Origins Report again show that poultry fed U.S. corn diets consumed less feed and had lower feed conversion rates than birds fed Argentine or Brazilian corn. The added feed efficiency translates into “significant long-term cost savings” for producers and adds to the list of U.S. corn advantages, which include higher levels of available starch for animal digestibility, lower mycotoxin levels, and larger kernel size. The next stage of the study will be to conduct commercial trials to benchmark the energy and milling costs of various corn origins and their performance in commercial poultry operations. A summary of the study and the full report can be obtained from the U.S. Grains Council.
