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Global feed market: U.S. corn prices are lower and the export outlook is cloudy

 Last Update: 2022-11-25
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Foreign media news on November 13: In the week ending November 11, 2022, global feed prices were led by corn to decline, mainly because the US Department of Agriculture raised its US corn production forecast in its monthly supply and demand report, while Mexico, the main buyer of US corn, reiterated that it will stop importing genetically modified corn in the future, and another large buyer, China, will also import Brazilian corn
from next month.

Chicago Board of Trade (CBOT) December 2022 corn futures closed at about $6.
58/bu on Friday, down 3.
4%
from a week ago.
The spot price of Meiwan 2 yellow corn for November schedule was $8.
09 per bushel, down 4.
7% from a week ago, and the December schedule was quoted at $
7.
8600 per bushel.
The March 2023 corn futures on the EURONEXT exchange closed at around Eur320/mt, down 4%
from a week ago.
FOB quotations for Argentine corn on the upper river were $300/mt, down 2.
3%
from a week ago.

International crude futures fell this week, also closing lower for the first time in four weeks, as U.
S.
crude inventories grew and concerns about
a recession and the outlook for fuel demand in China.
However, China's optimization of epidemic prevention and control measures has raised market expectations for economic activity and energy demand in the world's top crude oil importer, limiting the decline
in prices.
The West Texas Intermediate (WTI) December contract on the New York Mercantile Exchange (NYMEX) closed at $88.
96 a barrel on Friday, down about 4 percent
from a week ago.
Brent crude futures, the global benchmark, for January, were at $95.
99 a barrel, down about 2.
6 percent
from a week ago.
ICE's dollar index closed at 106.
164 on Friday, down 4.
2 percent
from a week ago.

The USDA raised its forecast for U.
S.
corn production, but the stock-to-use ratio remains at historically low levels

In its November supply and demand report, the USDA raised its 2022/23 U.
S.
corn production forecast to 13.
930 billion bushels, up 035 million bushels from October and up from analysts' forecasts of 13.
887 billion bushels, but down 7.
6%
from the previous year.
Corn yields were revised up to 172.
3 bushels per acre, up 0.
4 bushels from the previous month and higher than market expectations of 171.
9 bushels per acre
.

The USDA kept demand data unchanged this month, with corn exports remaining at 2.
15 billion bushels, but down 13% year-on-year; Corn use in the ethanol industry is expected to be 5.
275 billion bushels, unchanged from the previous month and down 1%
year-on-year.

U.
S.
corn ending stocks in 2022/23 were revised up to 1.
182 billion bushels, up 010 million bushels from the previous month, down 14.
2% year-on-year and below analysts' average expectations of 1.
207 billion bushels
.

The 2022/23 U.
S.
corn stock-to-use ratio is near a record low of about 8.
3%, down from 9.
2%
the previous year.

Global maize production was lowered

This month, the USDA slightly lowered its 2022/23 global coarse grain production forecast to 1,459.
5 million tonnes, down 2.
9 percent from the previous year, as global maize production was revised down to 1,168 million tonnes and maize production in the European Union, South Africa, the Philippines and Nigeria fell more than the US, Angola, Mali, Pakistan, Turkey and Senegal
.
The downgraded global maize production was 4 percent
lower than the previous year.

The USDA expects EU corn production this month to be 54.
8 million mt, down 1.
4 million mt or 2.
5% from last month's forecast and down 22.
8%
from 70.
98 million mt last year.
South African corn production was revised down by 600,000 mt to 16.
7 million mt.

Production expectations for some major exporters were unchanged, with 55 million mt of corn in Argentina and 126 million mt
in Brazil.

Global corn ending stocks are expected to be 300.
76 million tonnes, slightly lower than last month's forecast of 301.
1 million tonnes, down 2.
2%
year-on-year.
The global corn stockpile ratio is expected to be 25.
6%, essentially unchanged
from last month's expectations and the previous year.

U.
S.
corn export targets may be lowered

The USDA left its U.
S.
corn export forecast unchanged this month, which is somewhat surprising, as the downward revision of the corn export target makes sense
given the consistently slow pace of sales.

US net corn sales for 2022/23 were 265,000 mt in the week ended Nov.
3, down from 372,000
mt a week earlier, according to the USDA's weekly export sales report.

Year-to-date, total U.
S.
corn export sales (including exported and unloaded contracts) were 14.
73 million mt, down 54.
1%
year-on-year.
In contrast, the USDA forecasts U.
S.
corn exports for the year to be 54.
61 million mt, down 13.
0%
year-on-year.
U.
S.
corn exports declined this year, mainly due to sharp declines
in exports to China and Mexico.

So far this year, the United States has sold 3.
49 million tons to China, down 70.
8%
year-on-year.
Tensions between China and the United States have prompted China to seek diversification and reduce its dependence on
U.
S.
corn.

So far this year, the United States has sold 6.
05 million tons of corn to Mexico, down 31.
8%
year-on-year.
On November 9, Mexican President André Manuel López Obrador (AMLO) said that Mexico would not buy American yellow corn because it did not want genetically modified corn
.
On January 1, 2021, AMLO issued a presidential decree seeking to ban genetically modified corn by 2024 and phase out the herbicide glyphosate
.
Mexico imports about 17 million tons of genetically modified corn a year, with the United States being the number one supplier
.
More than 90 percent of all corn grown in the U.
S.
is genetically modified
.
According to a recent study released by World Vision, if Mexico enforced a GM corn ban in 2024, the U.
S.
corn industry would lose $3.
56 billion in the first year and $5.
56 billion
in the second year.
The U.
S.
corn industry will suffer $13.
61 billion in economic losses
over 10 years.

U.
S.
corn-producing states drove full-year E15 sales, helping to boost demand for corn in the ethanol industry

This month, the USDA kept the amount of corn used for ethanol production in 2022/23 unchanged at 5.
275 billion bushels, down about 1%
from the previous year.
In the first month of 2022/23, corn used to produce fuel ethanol in the United States was 383.
1 million bushels, down from 430.
7 million bushels in August and down from 407.
1 million bushels
last year.
This is mainly due to the sharp rise in corn costs and the sharp decline in ethanol production margins from last
year's record high.
However, given the continued strong demand for gasoline, ethanol prices are still lower than RBOB gasoline, so future demand is still expected to remain healthy
.

Since October, U.
S
.
ethanol production has shown continuous growth.
U.
S.
ethanol production rose for the fifth consecutive week in the week ended Nov.
4, hitting its highest average daily production
since the end of June, according to the U.
S.
Energy Information Administration (EIA).
Ethanol production for the week was 1.
051 million b/d, up 1.
2%
year-on-year.

One message in favor of the corn ethanol industry is that state governments in the Midwestern cornbelt are pushing for higher blended ethanol gasoline E15 to be sold
year-round in the United States.
Previously, the United States restricted the sale of this highly blended ethanol gasoline
during summer due to concerns that E15 could exacerbate summer haze.
Governors of several Midwestern states asked the EPA in early November to lift restrictions
on the sale of E15.

On November 10, media reported that Republican Senator Deb Fisher of Nebraska, the second-largest corn-producing state, plans to submit federal legislation to expand sales of E15 nationwide with the support of the American Petroleum Institute (API
).
If passed, the bill would be a win for U.
S.
corn farmers and the ethanol industry, helping to boost demand prospects
for corn ethanol.
API is one of the
major oil industry trade groups in the United States.
Earlier this year, API and the National Renewable Fuels Association (RFA) began discussions seeking to expand E15 applications
nationwide.

Brazil's corn production has been revised downwards and will still hit a record high

Brazil's National Commodity Supply Company (CONAB) forecast total Brazilian corn production of 126.
397 million mt in 2022/23, slightly lower than the previous month's forecast of 126.
941 million mt, but still a record production, up 12%
year-on-year, on November 9.
Among them, the area of second-crop corn is expected to be 17.
25 million hectares, an increase of 5.
4% year-on-year, and the output of second-crop corn is expected to be 96.
27 million tons, 12.
4%
year-on-year.

If the weather remains good, Brazil's 2022/23 corn production could reach a record 126.
6 million mt, up from 115 million mt
the previous year, Rabobank said.
Increased corn supplies from Brazil, coupled with logistical issues facing major exporters such as the United States, will help boost Brazilian corn exports
.
Rabobank expects Brazilian corn exports to reach a record 44 million to 46 million mt
in 2023.

Brazilian corn exports are expected to be 6.
024 million mt in November 2022, up from 2.
741 million mt
in November last year, according to the Brazilian Association of Grain Exporters (ANEC).
If the forecast materializes, corn exports in the first 11 months of 2022 will reach 37.
921 million mt, up from 20.
615 million mt
in 2021.

Argentina's corn planting faced the impact of drought, and the export quota was raised

Farmers could switch 100,000 hectares of corn arable land to soybeans, bringing Argentina's corn area to 7.
9 million hectares
in 2022/23 as insufficient soil moisture continues to hamper corn planting in Argentina, the Rosario Grain Exchange said.

The Argentine government confirmed this week that it has increased Argentina's corn exports in 2022/23 to 20 million tonnes, up from 10 million tonnes the previous year, which will apply to the corn crop
harvested in 2023.

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