Road to a record in maize exports

Road to a record in maize exports

Foreign maize sales are at record levels for this time of year. SB processing fell in July, although the accumulated continues above last year.

The 2020/21 maize season, started almost 6 months ago, broke through the 34 Mil MT roof this week. Thus, for this time of the year, it is consolidated as the campaign with the highest level of Export Sales Affidavits (DJVE) of which there is a record to date.

There’s still 4 Mil MT remaining for the current campaign to exceed the total declared in the 2018/19 business year, the highest-declared in National history, with more than 38.1 Mil MT at the end of said campaign. This favorable export context would not be possible if it weren’t for the great production outlook. In this sense, the 2020/21 maize campaign showed a growth of the planted area of ​​around 5%, which has also been driving an increase in the domestic consumption of the yellow grain.

However, the consequences of the Paraná downspout are being felt in Upriver shipments. From 08/25 to 09/25, cargos of 2.5 Mil MT of maize are expected, of which about 51% will be loaded out of the Great metropolitan area of Rosario. It’s a different scenario if we look at the same period in 2020, when 1.5 Mil MT were shipped, but 67% of the corn was projected to ship from Upriver.

As for SB side, there were DJVE for almost 0.5 Mil MT, with the current season accumulating 25.3 Mil MT (considering the exports of the entire complex equivalent in SB), slightly above the levels last year, which accumulated at this time of year 25 Mil MT. However, it is still behind the average of the last five seasons, which accumulated an average of 26.4 Mil MT for this same date.

However, behind these numbers, we must highlight the improvement in the prospects of the processing industry. By-products and SBO DJVE total 15.3 Mil MT and 3 Mil MT showing year-on-year increases of 9% and 4%, respectively. This rise is offset by a 20% drop in Sb exports, which has been declared for export of about 5 Mil MT.

Regarding the upcoming 2021/22 campaign, starting in March 2022 for maize and a month later for SB, the news is not the best in terms of production. As GEA pointed out in its weekly report, the US National Oceanic and Atmospheric Administration (NOAA) increased the probability to 67-70% that we will again encounter a “La Niña” year. A context of less rainfall due to this climatic phenomenon could complicate the future productive dynamics for the country, although a final outlook is still pending.

Soybean crush fell in July, although the accumulated remains above last year

3.8 Mil MT of SB were crushed in July, down from 4 Mil MT in June, although above 3.5 Mil MT in the same month last year. The 2020/21 campaign has been exceeding the previous business year month by month in terms of bean processing, given the improvement in international demand levels.

However, the difference between the tons processed and the tons produced of by-products (oil, flour and expellers) continues to grow year by year. Although this difference also includes the husk, which is a usable product for sale, the increase in this ratio is also explained by other factors, among which the loss of soy protein stands out. This loss of protein implies a greater requirement for drying, which reduces moisture and consequently limits the use of SB, by obtaining a lower tonnage of by-products.

The US campaign: up north, maize also breaks records

With price levels not seen in seven years and productive improvements accumulated over the last decade, maize will begin its new commercial season in the United States in September with an encouraging outlook. A 2020/21 season will close with the highest level of maize exports in history, more than 70.3 Mil MT. This amount comfortably surpasses the 2013/14 season, which came close to 60.2 Mil MT for this time of the year.

All focus turns now to the 2021/22 campaign, which accumulates export commitments for almost 19.3 Mil MT of maize. With the data for the last two weeks lacking, by a narrow margin, the 2021/22 campaign already broke the committed tonnage record before the start of the campaign, a milestone that until now the current 2020/21 campaign held.

At its pace, the new US SB campaign kicks off in September with a positive outlook. The 2020/21 commercial year would close with bean exports for more than 62.1 Mil MT. Thus, it becomes the season with the most sales in history, slightly exceeding the 2016/17 season when 60.5 Mil MT were exported.

However, exports of the campaign that is about to begin have accumulated about 15.6 Mil MT of SB. This number is below the average of 19 Mil MT of the last five seasons and less than half of the accumulated figure that the 2020/21 season showed before its start, with more than 29.3 Mil MT. The condition of SB crops may be the starting point to explain the caution in export commitments. While 69% of the lots show Good-to-Excellent conditions at this same time last year, currently 56% of the area planted with SB is in that state, which is expected to have a downward impact on productive yields.

Bearish condition, bullish price

SB and maize, respectively, lost 4 points from their Good-to-Excellent condition in just two weeks. At this time, the operators’ forecasts were a bit more optimistic, estimating the condition of the grains at values ​​higher than those reported by the USDA. Not satisfied with this, the weather does not seem to improve for crops in the short term, with high and sustained temperatures accompanied by forecasts of more heat in the next week.

In addition, the market for biofuels also pushes prices in the United States. The weekly production of ethanol in the US fell to a 6-month low due to the shortage of maize, which underpins prices. At the same time, the USDA launched the Higher Blends Infrastructure Incentive Program, an investment program worth nearly $26 million to reinforce a series of regional biofuel-related projects in the United States.

In this framework, SB has been accumulating increases of 5.6% in the week and closed on Thursday at 502.7 USD/MT for its nearby position. Meanwhile, maize showed an increase of 2.4% and ended yesterday at around 217.3 USD/MT.

Source: https://bcr.com.ar/

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