As harvest progresses in the United States, traders have adjusted their
corn yield estimates upwards. This, combined with strong export from
Brazil, has put pressure on local corn prices, giving them little
chance of recovering.
In September, Brazil exported 5,914,353 million tons of corn, according to
data from Brazil customs office. This figure represents a new record for
the month of September and the second largest export month in record. Large
Brazilian shipments been felt throughout the South American marketing year,
preventing corn prices from recovering, despite active demand export
demand, primarily coming from destinations in Southeast Asia.
This strong export volume comes from a remarkable 2016/17 corn crop in
Brazil, which reached 98.5 million tons. The strong year-over-year increase
was due given the very poor 2015/16 crop, when a severe drought affected
the 2016 ‘safrinha’ (second corn crop that represents the bulk of Brazil’s
corn exports) and production totaled 67 Mt.
In this scenario of low prices and very strong export competition,
Argentine corn has to meet the demand of different foreign destinations.
As of September 27, corn purchases from the export sector reached 21.69 Mt.
This value is 25% higher than traded volume at the same time last year
(17.31 Mt), but, more importantly, shows that the export would have covered
the export commitments.
As of October 4, corn export sales have reached 19.5 million tons, behind
the 20.4 Mt of exports sales made at the same date last year. Although
foreign sales are growing, they are far from showing the pattern of
previous campaigns, which can be seen in the attached graph.
As months go on, expectations of placing the cereal on the export market
have become a little pessimistic given the large supply available.
Anticipating the new USDA WASDE report, the International Cereal Council
(ICC) increased its estimates of US corn production 2017/18 by 7%.
According to its latest report published on September 28, “despite concerns
about suboptimal conditions during pollination, harvest reports have so far
confirmed strong productivity”. Therefore, the Council production figure
was revised up to 6.4 million tons, to 358.4 million tons. "This figure is
still 7% below the peak reached in the 2016/17 season for this exporting
country and competitor of Argentine corn.