The Black Sea region have already lost large share of its corn production potential after the harsh drought and severe lack of rains hit the region in Jul, cutting yields prospects.

Recently, a number of local agencies revised down their projections of corn harvests in their countries. ASAP Agri slashed its corn crop forecast for Ukraine in 2024 by 5.2 MMT to 24.1 MMT, now 21% below the last year, while the UGA reduced it by 2.1 MMT to 23.4 MMT, also -21% (6.2 MMT) y/y.

Sovecon reduced its expectations for russian 2024 harvest by 1.2 MMT to 13.4 MMT, while July WASDE was at 15 MMT.

The EU Commission cut its forecasts for 2024 corn crops in Romania and Bulgaria. Romanian production was reduced by 1.1 MMT m/m to 9.5 MMT (-10% y/y), and Bulgarian harvest was lowered by 0.4 MMT m/m to 2.6 MMT (+8% y/y).

We do not exclude that we may see some corresponding adjustments in Aug WASDE due on next Monday. But the question is, whether the world market would feel these loses in the Black Sea.

The USA may harvest a smaller corn crop in 2024/25 MY. The last production forecast from the USDA is at 383.6 MMT, down 2% y/y, 3rd highest in the history of the USA. Also, the current crop condition is good and the weather in forecasts is favorable. Thus, last week, StoneX pegged its harvest forecast at 15.207 bbu (386.3 MMT), 107 mbu (2.7 MMT) above the USDA, due to better yields prospects. In case StoneX figure will come true, it will become 2nd highest crop in the USA.

Also, the world will have less Brazilian corn. The country is harvesting its 2023/24 crop, with the yields of the second-crop corn is rather mixed across the country. The USDA sees Brazil’s 2023/24 crop at 122 MMT, down sizably from a record 137 MMT last season (-11% y/y). Nevertheless, the volume would be the second largest ever. Last week, StoneX pegged its harvest forecast for Brazil for 2023/24 MY at 121.8 MMT.

In Argentina the crop will rebound from the last year’s losses. The USDA sees the country’s 2023/24 corn crop at 52 MMT vs 36 MMT the year ago, up 44% y/y.

Thus, we are on track to have less corn supply from the key exporting countries, but the volumes will still historically high. At the same time, the demand from some of the main buyers may be restrained. The USDA sees China’s import in 2024/25 MY at 23 MMT, steady y/y.

The demand from the EU is questionable. The USDA now sees it at 18 MMT, down from 20.5 MMT LY. However, the recent reduction to crop forecast by the European Commission by 1.9 MMT m/m to 62.9 MMT may lead to upward revision of EU’s import forecast.

For Ukraine, it is also important to see the demand from Egypt and Turkey. For Egypt, the current forecast from the USDA is at 8 MMT for 2024/25 MY, up 7% y/y. In turn, Turkey may slash import by 40% y/y to 1.8 MMT.

 

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