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Brazil’s bin-busting corn crop poised to drive down prices

Production to double in 10 years.

WESTERN PRODUCER — This will be a momentous year in the corn market, says analyst Todd Hultman.

Brazil is poised to export 53 million tonnes of the crop in 2022-23, compared to 45 million tonnes for the United States.

“They are easily passing us on the export total, and that’s the first time in history we have seen that,” he said during a presentation at the DTN Ag Summit Series. Hultman is lead analyst with DTN.

The U.S. Department of Agriculture is forecasting more of the same in 2023-24, with Brazil shipping out 55 million tonnes of the crop compared to U.S. sales of 53 million tonnes.

“Brazil is on the rise and is not getting any easier to compete with,” he said.

The country’s 2022-23 production was 130 million tonnes, which was the eighth record harvest since 2010.

“There is just no sign of that stopping anytime soon,” said Hultman.

Production has more than doubled over the past decade and will continue on that trajectory as Brazil converts more pasture into cropland.

The competition from Brazil is one of the main reasons U.S. corn prices have been plummeting and that affects other grains like wheat and barley.

China didn’t start buying U.S. corn until March, which is much later than usual due to the record Brazilian harvest.

“We’ve been competing with Brazil through this whole time and they’ve really been tough on us,” said Hultman.

To make matters worse, China started cancelling U.S. sales in late-April as it appears that Brazil has another bin-buster on the way. The USDA is forecasting 129 million tonnes of Brazilian production in 2023-24.

December corn futures were down about US$1 per bushel from the start of the year at the time of his presentation on May 23.

“It has been a very tough start, and frankly, that is a much earlier selloff in the season than we usually see,” he said.

July corn futures prices in Brazil fell 36 percent over the past two months, which is confirmation that another big safrinha (second crop) of corn is on the way. Futures values are in the $4.50 to $4.60 per bu. range.

The USDA is forecasting 56.43 million tonnes of U.S. corn ending stocks in 2023-24, up from 35.98 million tonnes this year.

Hultman thinks it could be even higher than that because he feels the USDA’s demand estimates are too high given the stiff competition from Brazil.

“I’m very concerned about just how low these new crop corn prices are going to go,” he said.

The USDA is forecasting an average farm cash price of $4.80 per bu. in 2023-24.

“I think that’s going to be too high,” said Hultman.

His old crop soybean outlook was extremely bullish to start the year, but that has been tempered by unforeseen circumstances.

U.S. bank failures hit the market in early March, undermining investor confidence in commodity markets.

Around the same time, there was a break in China’s soybean prices, curtailing import demand for the commodity.

It has been downhill since then, with the November soybean futures contract falling below $12 per bu. by mid-May.

The USDA is forecasting 9.11 million tonnes of U.S. ending stocks in 2023-24, up from 5.86 million tonnes this year.

Once again, Hultman thinks it will be higher than that due to stiff competition from Brazil.

Brazil overtook the U.S. as the world’s largest soybean exporter in 2013 and hasn’t looked back.

In 2023-24 the country is expected to ship out 96.5 million tonnes of the oilseed, compared to U.S. sales of 53.75 million tonnes.

Brazil harvested 155 million tonnes of the crop this year, the ninth record crop since 2010. The early estimate for next year is 163 million tonnes, yet another record.

The USDA is forecasting a national farm soybean cash price of $12.10 per bu. in 2023-24 based on its ending stocks estimate.

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