About 560,000 mt of US corn shipments to China were canceled in the week ended April 28 as buyers from the latter shift their attention to Brazil, market sources told S&P Global Commodity Insights.
Sources attributed cancellations to plummeting domestic corn prices in Brazil where record output is projected in the marketing year 2022-23 (May-June).
A grain analyst based in the US said April 27 that “The sharp decline in Brazilian corn basis has paused any US corn shipment for now, as Chinese buyers are anticipating further fall in prices with record crop projection and storage woes in the country.” “The market is counting on strong safrinha crop,” the analyst added.
According to USDA’s Foreign Agricultural Service data, 327,000 mt of corn shipment to China was canceled on April 24 and another 233,000 mt on April 27. The weekly sales report released on April 27 also mentioned a corn shipment cancellation of 64,300 mt in the week ended April 20. Overall, 624,300 mt of US corn export shipments to China have been canceled so far in MY 2022-23, the data showed.
The pace of US sales of the most recent harvest, which is about 33% lower than the same time last year, has been seen slowing ahead of the upcoming Brazilian harvest, USDA data showed, with the corn sales standing at 400,000 mt in the week ended April 20. The USDA is currently projecting only a 25% decline in sales this season.
Brazilian national food agency Conab has estimated the second season’s corn harvest at 95.3 million mt. Crop harvest projection in the key producing region like Mato Grosso stands at 46.4 million mt, according to local government agency IMEA.
With the Brazilian corn harvest estimated at 124.897 million mt and the bumper soybean crop projected at 154 million mt by the USDA, a lack of storage and shipment delays stemming from logistical challenges have led to a sharp drop in premiums, according to sources.
“Expectation of record crop has raised concerns of further stress on domestic logistics and storage chain, which is already struggling to absorb country’s near record high soybean crop,” another analyst said. “Farmers and cooperatives are buying silo bags while others are expecting to store their corn outdoors, which is further pressuring the prices.”
According to trade sources, Brazil is likely to export more corn in MY 2022-23 than the US since 2013, as it expects a record-high harvest in the second crop season.
Source : Hellenic