Global corn production is expected to fall from 1.217 to 1.168 billion tons in 2022/23 compared to the previous season, but will exceed 1.13 billion tons in the 2020/21 season. However, the delay of the corn harvest in Ukraine and sowing in Argentina due to the drought could soon lead to an adjustment of the forecasts.
In the December USDA report, the crop evaluation for Ukraine is precisely reduced, as only 2.5 million hectares or 60% of the areas from which 15.5 million tons of corn were harvested with a yield of 6.13 tons/hectare are threshed by unfavorable weather as of December 1. A few dry and frosty days this week have resumed cleaning, but snow fell again yesterday and temperatures will rise over the next few days with more rain to snow.
In November, the USDA estimated the harvest in Ukraine at 31.5 million tons, but even if farmers thresh all crops without losses, this year’s harvest will not exceed 25 million tons, although last year it reached 42 million tons.
Buying prices for corn in Ukraine remain at $175-206/ton under pressure to lower global quotes and low ship call rates to Black Sea ports.
Romania will harvest its lowest corn crop since 2007 this year as drought has reduced it by 40-50% and the average yield is around 3 tons/hectare. The drought has affected not only Romania but also other EU countries, so the harvest forecast for the EU is lowered to 53-54 million tons, compared to 71 million tons in 2021/22.
There will be little rainfall in Argentina, but the intense heat will put additional stress on the plants, which will have a negative impact on the harvest potential of soybeans and corn. The weather this week will not accelerate sowing very slowly. In general, conditions are not favorable for the development of crops that need a lot of rain.
As of December 1, only 19.4% of the area in Argentina was sown with soybeans and 23.8% of the planned 7.3 million hectares with corn, which is 20% and 6.2% respectively compared to last year’s levels.
The growing trade dispute over GMO corn between Mexico and the US could disrupt the North American corn market. Back in December 2020, Mexico banned the import of GMO corn from 2024 and imposed a phased ban on the use of glyphosate, and on November 28, the US threatened to sue Mexico if it did not overturn the ruling. The US believes a phased rejection will significantly affect trade and hurt farmers in both countries, while Mexico is proposing in response to allow the import of yellow corn, which is used for animal feed, but ban white corn, which is intended for human consumption.
But such a compromise does not please the president of the US National Association of Corn Producers, Tom Haag, who said the decision to block all biotech corn violates the terms of the US-Mexico-Canada Agreement (USMCA).
Mexico is the largest buyer of US corn, having purchased 16.8 million tons of corn in 2021/22. More than 90% of the corn in the US is genetically modified corn.
Chicago corn futures for December have fallen another 1.5% since Monday to $246.2/ton, after losing 8% in the month, and are approaching the level of early March 2022, although they are still 12.6% above the level of the previous year.
Source: UkrAgroConsult (Ukraine)